Page 51 - DIY Investor Magazine | Issue 33

2022 INVESTMENT TRUST RATINGS: INCOME AND GROWTH
Kepler’s investment trust ratings identify the top-performing closed- ended funds in the Growth, Income & Growth and Alternative Income categories – writes Hannah Barnaby
They reward trusts which have done well in the context of their own goals and benchmarks, and which have done so for a sustained period; the selection system is entirely quantitative, and allows it to set aside all biases, views and commercial relationships – and look at the universe in a purely objective way.
To identify the top Growth trusts, it starts by looking at performance versus the benchmark, applies key information ratios and metrics and compares performance in varying market conditions. Fair comparisons are made over a five year period, between funds divided into ‘super sectors’ based on NAV total return performance.
To win an Income and Growth rating a trust needs to have
a 3% yield and 3% per annum dividend growth over the
past five years as a minimum. They may be trusts that the typical income investor at the beginning of drawdown might consider, with a balance between income and dividend growth characteristics. See the full methodology here >
2022 INCOME AND GROWTH RATED TRUSTS
TRUST VALUE/ QUALITY GROWTH
Aberdeen Standard Equity Inc
JPMorgan Elect Managed Inc
Murray International
BlackRock Sustainable American Income
North American Income
Source: Kepler calculations
0.2 5.9
0.9 5.3
0.4 5.6
0.4 5.2
-0.5 5.1
Henderson International Income
Montanaro UK Smaller Companies
JPMorgan Global Growth & Income
JPMorgan Claverhouse
BlackRock Latin American
Chelverton UK Dividend Trust
BlackRock Income and Growth
Schroder Income Growth
City of London
0.6 4.6
4.2 3.4
1.5 4.6
There has been more turnover in this list than previously because growth has been in favour for the majority of the past five years and income managers have struggled to keep up as value stocks, which tend to yield more, have suffered.
There are ten organic additions and notably the average Growth/Value score of 2022’s list is significantly higher than 2021’s, with a score of 0.8 versus -1.8. The average quality score has fallen from 7 to 5.5 but there are still options for the investor who favours value such as North American Income.
The quant screens highlight the most attractive characteristics investors could ask of a trust; any fund selection process could only begin with such screens, and there are many hidden risks and factors to consider, but it could be a good starting point for idea generation.
They inevitably favour what worked in the past, and at such
a tumultuous time it is worth considering whether a strategy which worked well pre-COVID will continue to do the same. NAV should be far more important to the returns experienced by shareholders than share price discounts, but they can be very important to returns, and should also be considered.
See the full 2022 ratings here >
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
1.4
2.0
5.5
5.2
0.5 5.8
0.8 5.5
0.0 5.1
-0.4 5.8
Lowland 3.1 5.1
Diverse Income Trust
Utilico Emerging Markets
BMO Managed Portfolio Income
Law Debenture Corporation
0.5 6.4
0.0 10.0
1.0 5.7
0.6 5.3
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DIY Investor Magazine · Apr 2022