3 Top Rated UK Equity Income Trusts

THE INCOME INVESTOR: Looking for some investment ideas for your new ISA allowance? Check out these top-rated closed-end funds for domestic exposure

Emma Wall 8 April, 2014 | 4:43PM
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The UK economy is growing, the Budget has boosted the domestic stock market and the pound is looking stable. If you’re feeling bullish on UK equities, consider these investment trusts for a core holding in your ISA portfolio. They all have an income bias, so you can choose to be paid the yield tax-free within your ISA wrapper, or accumulate the payments and benefit from compound interest.

These five investment trusts carry either a Gold or Silver Morningstar analyst rating, and were identified as highly rated and outperforming using the free Morningstar Closed-end Fund Screener.

Finsbury Growth & Income Trust (FGT)

Gold rated fund manager Nick Train draws on his three decades of expertise, which cover a number of market cycles, and is considered experienced, talented, and pragmatic by Morningstar analyst Szymon Idzikowski.

“Train’s process is thorough and well-proven over a number of market cycles—another reason for our conviction. It’s an approach that’s been applied consistently and results in a concentrated list of stocks,” he added.

Lowland Investment Company (LWI)

This Silver rated trust is liked by Morningstar analyst Jackie Beard because of the continuity of management. Fund manager James Henderson has been at the firm of the same name since 1983 and his team comprises colleagues with whom he has worked since the Nineties.

“Henderson builds a diversified portfolio across the market-cap spectrum and likes to have a tail of AIM-listed stocks,” said Beard. “That means the fund won’t suit everyone as it will be too high-risk for some, but in his search for growth of both capital and income he believes some of the best opportunities can be found lower down the cap scale.”

Perpetual Income & Growth (PLI)

The manager of this Gold rated, five-star trust has recently experienced a significant change in his job description, but this has not shaken analysts’ conviction in the fund.

“The fund’s manager Mark Barnett will be taking over Neil Woodford’s funds in May 2014 when Woodford leaves the firm, and that brings some uncertainty,” said Beard. “Nonetheless, Barnett is a seasoned investor who has demonstrated his own success, the purest form of which is at this very fund.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Finsbury Growth & Income Ord840.00 GBX0.24Rating
Lowland Ord125.00 GBX-0.40Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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