Highest-yielding investment trust sectors revealed
21st October 2016 15:40
by Marina Gerner from interactive investor
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A list of the highest-yielding investment company sectors, defined as those yielding over 3%, has been published by the Association of Investment Companies (AIC).
At end September 2016, the highest-yielding sector was the debt sector, with an average yield of 6.9%. And while income-focused specialist sectors have traded on premiums in recent years, this sector is currently on a discount of 3.5%.
In contrast, the leasing sector, the second highest-yielding sector with an average dividend of 6.1%, was trading on a premium of 17.1%.
The sectors on a premium are infrastructure: renewable energy, which is on a premium of 7.3% and yields 5.9%; and the property specialist sector, which is on a premium of 14.9% and yields 4.9%.
Strong appetite for income
Annabel Brodie-Smith, communications director at the AIC, says: "Investor appetite for income remains strong in this low interest rate environment, and this is reflected by a number of higher-yielding specialist sectors trading on premiums.
'Investors should not buy on the basis of the headline yield alone'"The problems in the open-ended property sector this summer also highlight that the investment company closed-ended structure works well for illiquid assets, which can offer a higher level of income, such as commercial property and infrastructure.
"But investors should be aware that sentiment can change and that income from investment companies is not guaranteed. Investors should not buy on the basis of the headline yield alone.
"There's a broad spectrum of risk and reward, so it is crucial that investors do their homework, take a long-term view, and if necessary, seek financial advice."
| AIC sector | Disc/prem (%) | Yield (%) |
| Sector specialist: debt | -3.5 | 6.9 |
| Sector specialist: leasing | 17.1 | 6.1 |
| UK equity & bond income | -2.4 | 6.0 |
| Hedge funds | -15.5 | 6.0 |
| Sector specialist: infrastructure - renewable energy | 7.3 | 5.9 |
| Property direct: UK | -5.9 | 5.0 |
| Property specialist | 14.9 | 4.9 |
| Sector specialist: insurance & reinsurance strategies | -6.9 | 4.9 |
| Sector specialist: commodities & natural resources | -13.4 | 4.9 |
| Sector specialist: infrastructure | 15.5 | 4.5 |
| Property direct: Europe | -12.6 | 3.8 |
| Global equity income | -0.9 | 3.8 |
| UK equity income | -4.2 | 3.7 |
| Source: AIC using Morningstar. Data as at 30/09/2016. | ||
This article was originally published by our sister magazine Money Observer here
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.