Mixed Asset 61-100% Equity
Rated Fund 2017-19. Seeks sustainable dividends from the best companies
UK-focused Shires Income got a new manager in the form of Iain Pyle in 2018. The investment trust has recently seen some discount volatility, but continues to outperform UK equity income trusts over three years.
Shires offers income investors an attractive yield of 5.5% and quarterly dividend payments. The portfolio is substantially invested in UK equities, with around a quarter invested in higher yielding preference shares. It also generates extra income by a small options writing programme.
By using preference shares and options to support the trust’s yield, Pyle, an investment director at Aberdeen Standard Investments, can hold a more diverse equity portfolio than he might otherwise have to had he been relying solely on higher yielding UK companies.
The manager takes a fundamental, bottom-up approach. He seeks to identify around 50 high quality businesses that have good balance sheets and experienced management teams. His conservative buy-and-hold approach usually results in low turnover within the portfolio.
He believes that paying dividends is a good discipline for company managements and argues that well-managed companies with sustainable business models should, almost by definition, be able to pay dividends.
Pyle believes it is a good time to be an income investor. Income-paying companies have been sold off excessively amid concerns over rising interest rates and, as a result, value is emerging, he says.
Shares in the trust have traded at a discount to net asset value for most of the last three years. The widest was 14% in mid 2016. Over the past year, it has been narrower, typically in the small single digits. The trust has ongoing charges of 0.95%.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|Aberdeen Smaller Companies Inc Ord||8.54 %|
|Ecclesiastical Insurance Office PLC 8.625 % Non-Cum.Irred.Pref.Shs||6.47 %|
|RSA Insurance Group PLC 7.375% Cum.Irred.Pref Shs||5.59 %|
|General Accident PLC 7 7/8 % Cum.Irred.Pref.Shs||4.76 %|
|Santander UK PLC 10 3/8 % Non-Cum Sterling Pref.Shs||4.66 %|
|Standard Chartered PLC 8-1/4% Non-Cum.Irred.Pref Shs||3.71 %|
|Royal Dutch Shell PLC B||3.43 %|
|BP PLC||3.02 %|
|BHP Group PLC||2.69 %|
|Prudential PLC||2.63 %|
|United Kingdom||90.72 %|
|Financial Services||24.59 %|
|Consumer Defensive||12.91 %|
|Real Estate||8.27 %|
|Basic materials||8.14 %|
|Communication Services||6.25 %|
|Consumer Cyclical||5.37 %|
Data provided by Morningstar.
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