Diverse Income Trust

UK Equity Income

Rated Fund 2016-20. Good for broad-based small company exposure

Diverse Income has outperformed its peer group significantly since its launch in 2011, and although it has lost its shine a little recently, we continue to rate the proposition for income-seeking investors. The trust has grown its dividend by an average of 10% over the past five years and derives a current yield of 3.8%, paid quarterly. This is fairly well-supported: the trust has enough revenue reserves to cover the cost of its annual dividend for the next 1.3 years.

Managers Gervais Williams and Martin Turner can invest in UK companies of any size but have a bias towards medium-sized and small companies, which are less well-known than large companies for their income credentials. At the end of 2019, around one third of the portfolio was invested in Alternative Investment Market stocks. Smaller companies are often overlooked and under-researched by other investors, so the managers feel there is more opportunity to benefit from their potential for growth. The type of company they particularly favour is one that is able to introduce product changes repeatedly to stay ahead of the competition.

They have 21% in large companies, but their caution on this area of the market is exemplified by a put option on the FTSE 100 worth 0.9% of assets. This provides insurance against the index falling in value, via an option to sell the index at a particular price, with a view to buying back at a lower price. Shares in the trust went from a very modest premium at the end of 2019 to a discount that averaged almost 4% last year.

Narrative and ratings content all as of January 2020.

See all Money Observer rated funds
Name
Diverse Income Trust
Manager
Premier Portfolio Managers Limited
Type
Closed Ended Investment Company
ISIN
GB00B65TLW28
Sector
UK Equity Income
Launched
28/04/2011
OCF
1.15 %
Risk Rating
1
3 Year Sharpe
-0.07
3 Year Alpha
1.47
Yield
4.4 %
Fund Size
£ 290.02 million
NAV
89
Gearing
98
Discount Premium
-9
The company will invest primarily in quoted or traded UK companies with a wide range of market cap but a long-term bias toward small and mid-cap equities. The company will also invest in large cap companies, including FTSE 100 constituents, where it is believed that this may increase shareholder value. The Company may utilise derivative instruments including index-linked notes, contracts for differences, covered options and other equity-related derivative instruments. The company may invest in unquoted companies however the aggregate investments in such companies will not exceed 5% of the value of the Funds investment portfolio as at the time of investment.
Holding %
CMC Markets PLC 2.76 %
Centamin PLC 2.58 %
Highland Gold Mining Ltd 2.16 %
IG Group Holdings PLC 1.89 %
Morrison (Wm) Supermarkets PLC 1.79 %
Admiral Group PLC 1.78 %
Strix Group PLC 1.75 %
FRP Advisory Group PLC Ordinary Shares 1.70 %
Randall & Quilter Investment Holdings Ltd 1.64 %
Concurrent Technologies PLC 1.62 %
Region %
United Kingdom 83.76 %
Sector %
Financial Services 29.01 %
Basic materials 15.48 %
Technology 10.48 %
Energy 8.37 %
Consumer Defensive 7.87 %
Industrials 7.82 %
Consumer Cyclical 6.33 %
Name
Premier Portfolio Managers Limited
Address
GU1 3DE, Guildford, United Kingdom
UCITS
No
Legal Structure
Closed Ended Investment Company

Managers

Gervais Williams
Joined 04/28/2011

Gervais Williams joined Miton Group plc in 2011. He manages a number of funds and trusts that aggregate to just under £2.0bn. He is also Senior Executive Director at Miton Group plc. His fund management career extends over 30 years including 17 years at Gartmore Group Ltd, where he was head of UK Small Companies investing in UK smaller companies and Irish equities. Gervais is a member of the AIM Advisory Council, chairman of the Quoted Companies Alliance and a board member of The Investment Association. He is also on the EU Taskforce reviewing why the number of smaller IPOs has declined over recent decades. Gervais Williams published his first book 'Slow Finance' in the autumn of 2011, and his second book 'The Future is Small' was published in November 2014. His most recent book 'The Retreat of Globalisation' was published in December 2016.

Martin Turner
Joined 04/28/2011

Martin Turner joined Miton Group plc in May 2011. Martin's career in the City began in 1995 where he qualified as a Chartered Accountant with Arthur Andersen. He moved to Rothschild and in time on to Head of Pan European Mid and Small Cap Sales at Merrill Lynch. Following this, Martin was Head of Sales at Teathers/Landsbanki before taking the Head of Small/Mid Cap Equities role covering research, sales and trading at Collins Stewart. Martin graduated from Warwick University with a degree in Accounting and Financial Analysis.

Data provided by Morningstar.

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