My hand-picked portfolio of eight funds I’d recommend to EVERY investor: JEFF PRESTRIDGE
Over the years, I’ve toned down my approach to investing. I’m now less gung-ho and more considered. A Steady Eddie rather than an investor version of Lando Norris.Maybe, it’s an age thing – I’m now in my 60s and I’ve become slightly more risk-averse. Maybe a recent costly divorce, resulting in the loss of my much-loved self-invested personal pension, has caused a rethink.But I’m not sure these are the main reasons why I’m now a more conservative investor. I think it’s because I have finally found my investment comfort zone in a pool of investments which tick all my boxes.This pool comprises investment funds and stock market-listed investment trusts – vehicles run by professional managers with the underlying assets across numerous holdings.There are other common characteristics. They are all invested in equities, so there is no exposure to bonds, infrastructure or green energy projects. More importantly, they all deliver a stream of income, in some cases a drip-feed of growing income.For me, income is the elixir that makes long-term investing so worthwhile. It’s your reward for patience and sticking with investments when markets cut up rough.Of course, you don’t have to take the income: you can reinvest it as most people do, especially if they are building a portfolio with retirement in mind. But whatever ticks your box, income is a vital ingredient in the mix. These eight funds should give investors solid havens for their money There are plenty of strong options from around the world offering decent returnsWith all this in mind, I’m sharing with you the portfolio of eight investment funds that I have put together which embrace all the characteristics I’ve just mentioned. It’s equity-based, broadly invested, and each fund has a commitment to paying investors a regular income.Bar one, they are funds I’ve invested in at various stages in my journey. I would be comfortable recommending them to my sons as super investments to include in Junior Isas (Jisas) for their children – and to the increasing number of people running investment portfolios well into retirement.The eight are meant to fit like a jigsaw, giving investors broad exposure to both UK and overseas stock markets. But you can pick and mix: the choice is yours.They are ideal to hold in an Isa, a self-invested personal pension or a Jisa because of the tax-wrapper these three products all provide investors with.These wrappers will become increasingly important as Labour continues to increase taxes on dividends earned outside of a pension or Isa (they ratchet up next April), and imposes higher taxes on capital gains.The portfolio will work for you irrespective of whether you can only afford to invest a modest amount every month – regular investing makes great sense.The key – and this is crucial – is to view it as a long-term investment. That means staying with it for at least ten years, preferably longer. And not being shaken when markets correct, as they do from time to time.UK Law DebentureWhat this £1.4billion trust offers is exposure to the UK stock market with a twist – and a delectable rising income on top. The twist is provided by around a fifth of its assets being invested in an unlisted business, Independent Professional Services.This provider of trustee services to companies and pensions generates a big slice of the trust’s revenue which is used to pay investors their dividends.The remaining 80 per cent of assets are invested in UK equities by James Henderson and Laura Foll, fund managers at Janus Henderson – with the emphasis on identifying the quality companies that the market is currently undervaluing.This hybrid trust is unique, but in terms of investor outcomes, it delivers in spades.On the income front, it has grown its dividend (paid quarterly) for 15 years while either growing or maintaining it for 46.In July this year, the trust’s chief executive Denis Jackson said that a focus on providing a ‘regular and reliable income’ remained a priority.Fifteen and 46 will become 16 and 47 in the new year, when the trust declares its final quarterly divi for the financial year ending December 31.So far this year, it has paid divis totalling 25.125p a share compared with 24p over the same period in 2024. The annual dividend yield is around 3.2 per cent.In terms of total return, it has outperformed the FTSE All-Share Index over the past three, five and ten years. For example, respective five-year returns are 95 and 72 per cent. Total annual charges are competitive at 0.54 per cent and the shares are currently trading at around £10.50. The FTSE 250-listed trust has a stock market ticker of LWDB and an identification code of 3142921.Temple Bar There’s no reason Temple Bar will not be able to go from strength to strengthThis £1billion investment trust has enjoyed a renaissance since new managers took over in October 2020 and there is nothing to suggest it can’t continue.Ian Lance and Nick Purves of investment house Redwheel, the trust’s joint managers, are bargain hunters. They look to identifyUK stocks that are chronically undervalued but there is every chance that at some stage their shares will be re-rated.It’s an investment approach they honed at Schroders in the early 2000s, and it has worked a treat at Temple Bar.Over the past five years, the trust has delivered shareholders a 139 per cent return: more than double that of the average UK equity income trust (58 per cent) and in excess of the FTSE All-Share Index (72 per cent).For investors, the fund offers an attractive stream of dividend income, paid quarterly. In the current financial year (to the end of December), it has already declared 11.25p a share in dividends. This is the same amount that was paid last year, but with one more quarterly divi to be paid in the new year.To put these dividend sums into context, Temple’s shares trade at around £3.77, resulting in an annual dividend yield of 3 per cent. There is nothing complex about this trust.Its holdings are familiar names – the likes of BP, BT, Marks & Spencer, NatWest and Shell. But as the managers say in their latest market commentary: ‘UK equities are priced to offer relatively attractive returns into the future.’ A quarter of the assets are invested overseas.Total annual fund charges are reasonable, at 0.61 per cent. The trust is part of the FTSE 250. The market ticker is TMPL and identification code BMV92D6.GLOBAL F&CFTSE 100-listed investment trust F&C has been around since 1868 and its relevance as a core investor holding is strong as ever. It’s reliable and a provider of rising income to shareholders. Managed by Paul Niven of global investment house Columbia Threadneedle Investments, the £5.8billion fund has racked up 54 years of annual dividend growth, and is determined to extend the run. In the current financial year, it has announced three quarterly dividends totalling 11.4p a share.This compares to equivalent payments of 10.8p in the previous year, suggesting 54 will become 55 early next year. The annual dividend yield is modest at 1.3 per cent, but it’s a growing income that most investors crave.Niven is more of a portfolio overseer than a hands-on investment manager, parcelling out assets to various investment teams to run (most Columbia Threadneedle, some external).The result is a broad investment vehicle embracing everything from US equities (60 per cent) to private equity (11 per cent).Although its top seven holdings comprise six of the Magnificent Seven (Tesla being the absentee), they only account for 16 per cent of the trust’s assets.Five-year returns of 72 per cent compare favourably against the average for its global trust peer group of 28 per cent. Annual charges are keenly priced at 0.45 per cent. Its market ticker is FCIT and identification code 346607.M&G Global DividendThis fund is an unsung income star. Since launch in July 2008, it has increased its dividends (paid quarterly) every year. Quite remarkable for a fund that, unlike a stock market-listed investment trust, must promptly pay out the income it receives from its holdings – rather than cling on to some of it to pay out to investors when dividends may be hard to find.For investors, its appeal lies in its international diversification, providing the opportunity for them to receive returns (capital and income) from dividend-friendly companies in the United States, Canada and other overseas markets.Just 12 per cent of the assets are in UK companies. The fund’s success can be judged by the near £2.5billion of assets under its wing (it’s popular).It’s all down to investment manager Stuart Rhodes, who has been at the helm from the word go – and isn’t going anywhere else in a hurry (he’s committed to the fund).Over the past five years, it has generated returns of 75 per cent. To put this into perspective, the average global equity income fund has registered a 59 per cent return.Its portfolio is eclectic, including Magnificent Seven stocks Microsoft and Meta and more traditional income stocks such as UK tobacco giant Imperial Brands. M&G’s portfolio includes stocks in the ‘Magnificent Seven’But the common characteristic is that all the fund’s holdings pay a dividend: if a company stops doing so, it is removed from the portfolio. The annual dividend yield is a shade above 2 per cent and the annual charges total 0.66 per cent.UNITED STATESThe North American Income TrustWhat I like about this off-the-radar US investment trust (5 per cent is invested in Canada) is that it eschews the Magnificent Seven stocks in favour of companies that have a history of dividend growth.Among its top ten holdings are companies such as energy giant Chevron, healthcare company Johnson & Johnson and consumer goods business Philip Morris International, which have grown their respective dividends for 38, 63 and 16 years.Although the £419million trust has only been managed by Janus Henderson since summer of last year, the commitment to growing the dividend seems to be rock solid. It has notched up 17 years of dividend growth, and the managers are keen to keep the record going.Last financial year’s dividend, paid quarterly, totalled 12.2p a share and with one payment outstanding for the current year is on course to beat that amount. The shares trade at around £3.67.Total returns over five years of 80 per cent compare with its peer group average of 81 per cent. Annual fund charges total 0.77 per cent, the market ticker is NAIT, and the identification code is BJ00Z30.EUROPEFidelity EuropeanThis £2.1billion stock market-listed investment trust may not have income in its title, but its preferred investments are companies which can consistently grow their dividends.This income focus has resulted in the trust increasing its dividends (paid bi-annually) for 14 years on the trot.Last year’s dividends totalled 9.1p a share and it looks like the current financial year will deliver shareholders a bigger payment with the first divi of 3.9p being 8 per cent up on last year. The shares currently trade at £4.21.Fund scrutineer Fund Calibre describes Fidelity European as ‘a very solid core fund’ run by managers with bags of experience: Sam Morse and Marcel Stotzel.The performance numbers look good, with five-year returns of 69 per cent (the average for its peer group is 44 per cent).Annual fund charges are 0.68 per cent, the market ticker is FEV and the fund’s identification code is BK1PKQ9.JAPANZennor Japan Equity Income Zennor is a newcomer on the scene, but already making a favourable impressionAlthough this fund is a newbie – launched in April 2023 – it is already on the radar of fund-rating companies such as Fund Calibre. It’s a fund I looked at in January and, like Fund Calibre, I was impressed: a boutique investment house (Zennor Asset Management), which was founded five years ago by two fund managers – James Salter and David Mitchinson – who know the Japanese stock market inside out.This is one of two Japanese funds they manage (the other is Zennor Japan) and it has £229million under its belt.It’s a conservative fund, in that capital preservation is a high priority, but its launch could not have been better timed, with Japan plc undergoing something of a corporate governance makeover, resulting in many companies becoming more dividend-friendly.The managers believe this backdrop provides a powerful tailwind for dividends and should have a positive impact on share prices.The fund has certainly got off to a flying start. To date, it has generated returns of 58 per cent compared to a peer group average of 37 per cent.Dividends are paid bi-annually and the yield is 2.1 per cent. Total annual charges are 0.92 per cent.As Fund Calibre says, the fund should ‘provide meaningful downside protection and steady compounding potential for long-term investors’.EMERGING MARKETSUtilico Emerging MarketsWhat I love about this investment trust is its focus on income. It’s a characteristic that stands it apart from other emerging markets funds. Since launch in July 2015, the fund, now valued at £485million, has grown its dividend every year. No other emerging markets fund has a longer streak of rising dividend income.Managed by investment house ICM, the fund provides this income by investing in businesses which are integral to the development of emerging economies: port operators, utility providers and waste management companies.Such businesses tend to be cash-generative, resulting in dividend payouts.In the last financial year, Utilico paid 9.13p a share in dividends (8.6p in the previous year) and its first two quarterly payments for the year ending March 31 are up on the respective dividends paid out 12 months earlier. This indicates that the dividend growth story will continue.The dividend yield is 3.4 per cent and the shares stand at around £2.70. Its five-year returns of 64 per cent are below those for the average emerging markets trust (77 per cent), but it’s the income-friendliness of Utilico that stands it apart from its rivals.The FTSE 250 stock has a market ticker of UEM, and its identification code is BD45S96. Annual charges are 1.5 per cent.All prices correct at the time of writing.
已发布: 2025-12-22 16:27:00
