The highest-yielding investment trust sectors revealed

A list of the highest-yielding investment company sectors, defined as those yielding over 3 per cent, has been published by the Association of Investment Companies (AIC).

At end September 2016, the highest-yielding sector was the debt sector, with an average yield of 6.9 per cent. And while income-focused specialist sectors have traded on premiums in recent years, this sector is currently on a discount of 3.5 per cent.

In contrast, the leasing sector, the second highest-yielding sector with an average dividend of 6.1 per cent, was trading on a premium of 17.1 per cent.

The sectors on a premium are infrastructure: renewable energy, which is on a premium of 7.3 per cent and yields 5.9 per cent; and the property specialist sector, which is on a premium of 14.9 per cent and yields 4.9 per cent.

STRONG APPETITE FOR INCOME

Annabel Brodie-Smith, communications director at the AIC, says: 'Investor appetite for income remains strong in this low interest rate environment, and this is reflected by a number of higher-yielding specialist sectors trading on premiums.

'The problems in the open-ended property sector this summer also highlight that the investment company closed-ended structure works well for illiquid assets, which can offer a higher level of income, such as commercial property and infrastructure.

'But investors should be aware that sentiment can change and that income from investment companies is not guaranteed. Investors should not buy on the basis of the headline yield alone.

'There's a broad spectrum of risk and reward, so it is crucial that investors do their homework, take a long-term view, and if necessary, seek financial advice.'

The highest-yielding investment trust sectors
AIC sectorDisc/prem (%)Yield (%)
Sector specialist: debt-3.56.9
Sector specialist: leasing17.16.1
UK equity & bond income-2.46.0
Hedge funds-15.56.0
Sector specialist: infrastructure - renewable energy7.35.9
Property direct: UK-5.95.0
Property specialist14.94.9
Sector specialist: insurance & reinsurance strategies-6.94.9
Sector specialist: commodities & natural resources-13.44.9
Sector specialist: infrastructure15.54.5
Property direct: Europe-12.63.8
Global equity income-0.93.8
UK equity income-4.23.7
Source: AIC using Morningstar. Data as at 30/09/2016.

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