Shires Income

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
Name
Shires Income
Manager
Aberdeen Standard Investments
Type
Closed Ended Investment Company
ISIN
GB0008052507
Sector
UK Equity Income
Launched
31/03/1929
OCF
1.39 %
Risk Rating
4
3 Year Sharpe
0.76
3 Year Alpha
2.68
Yield
5 %
Benchmark
FTSE AllSh TR GBP
Fund Size
£ 79.97 million
NAV
266
Gearing
118
Discount Premium
-1
The investment objective is to provide shareholders with a high level of income, together with the potential for growth of both income and capital from a diversified portfolio substantially invested in UK equities but also in preference shares, convertibles and fixed income securities
Holding %
Aberdeen Smaller Companies Inc Ord 8.68 %
Ecclesiastical Insurance Office PLC 8.625% PRF PERPETUAL GBP 1 6.70 %
RSA Insurance Group PLC 7.38% PRF PERPETUAL GBP 1 5.58 %
General Accident PLC 7.875% PRF PERPETUAL GBP 1 4.63 %
Santander UK PLC 10.38% PRF PERPETUAL GBP 1 - 10.38% 4.53 %
Royal Dutch Shell PLC B 4.27 %
Standard Chartered PLC 8.25% PRF IRR GBP 1 3.69 %
BP PLC 3.30 %
Prudential PLC 3.07 %
GlaxoSmithKline PLC 2.61 %
Region %
United Kingdom 90.98 %
Sector %
Financial Services 20.02 %
Energy 13.07 %
Consumer Defensive 10.99 %
Consumer Cyclical 10.43 %
Healthcare 9.90 %
Industrials 9.42 %
Real Estate 7.34 %
Basic materials 6.00 %
Utilities 5.32 %
Communication Services 5.02 %
Name
Aberdeen Standard Investments
Address
EC4M 9HH, London, United Kingdom
UCITS
No
Legal Structure
Closed Ended Investment Company

Managers

Iain Pyle
Joined 05/03/2018

Data provided by Morningstar.

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