2 growth and income investment trusts I’d buy to retire on

Rupert Hargreaves — Thu, 05 Oct 2017 11:14:07 +0000

When it comes to UK-focused investment trusts that offer both growth and income, Jupiter UK Growth Investment Trust (LSE: JUKG) initially looks to be an attractive investment. Over the past five years, the managers of this firm have presided over a return of 65% excluding dividends.

At the time of writing the trust offers a dividend yield of 2.1% and trades at a 3% discount to net asset value.

Outperforming the market

Returns for the year ended June 30 showcase Jupiter’s potential. For the year, the firm’s net asset value per share rose by 26% to 334p from 265.4p the year before. This beat its benchmark, the FTSE All-Share Index, which reported a total return of 18%. According to Jupiter’s press release on the matter, its manager’s stock-picking and asset allocation skills were “shown to good effect,” during the year and the portfolio benefitted from a “strategic lack of exposure” to the oil and gas sector.

I believe that Jupiter is a great way to play the success of the UK economy. The fund has more than 20% of assets devoted to its top four holdings, Legal and General, Lloyds, Barclays and Sirius Minerals, all of which are UK market champions with bright outlooks. Other companies featured in the top 10 holdings are Taylor Wimpey and Thomas Cook, both of which offer growth and income.

However, despite Jupiter’s attractive qualities, the one drawback that I see is the trust’s fee schedule. Annual charges are 1.2% and the managers command a performance fee of 15% on profits. Few other investment trusts charge such a hefty performance fee. Still, for exposure to some of the UK’s fastest growing large-caps, Jupiter looks to me to be an attractive buy.

Income and growth

Murray Income Trust (LSE: MUT) does not charge a performance fee, and the trust’s annual operating expenses are only 0.7%, a little more than half of those charged by Jupiter.

As its name suggests, Murray is income-focused. The trust currently supports a dividend yield of 4.2% and trades at a discount to net asset value of 8.5%. The portfolio is built with income in mind. The top holdings are Unilever, GlaxoSmithKline and British American Tobacco with other FTSE 100 income champions making up the rest of the portfolio.

As a diversified income play, Murray ticks all the boxes. The trust has low fees, a well-diversified portfolio and a dividend yield that’s above the FTSE 100 average of around 3.8%. What’s more, there’s scope for capital growth within the portfolio. Growth stocks such as British American Tobacco and Unilever have outperformed the FTSE 100 over the past five years (by 14.5% and 62.5% respectively), and I believe that this trend is set to continue meaning that there’s the prospect of both capital growth and income from Murray.

So, if you’re looking for an income fund that also has the potential for capital growth to add to your retirement portfolio, Murray deserves your attention.

The post 2 growth and income investment trusts I’d buy to retire on appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares in GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2 fast-rising investment trusts that could make you a millionaire

Peter Stephens — Fri, 08 Sep 2017 06:07:09 +0000

The FTSE 100 has performed relatively well in the last five years. It has risen by 28% and, when dividends are included, this figure is close to 50%. However, some investment trusts have been able to better this return during the same time period. In some cases, though, they continue to trade at a discount to their net asset value (NAV). As such, they could still offer good value for money, as well as high growth potential in the long run. Here are two such trusts which could be worth buying right now.

Impressive performance

Rising by 128% in the last five years is the Mercantile Investment Trust (LSE: MRC). It focuses on mid and small-cap UK stocks, and they could help it to deliver impressive returns in future. One reason for this is the uncertainty surrounding the UK economy. With Brexit causing consumer and business confidence to come under pressure following a spike in inflation, many investors are focusing to a greater extent on larger, more internationally-exposed companies. This could mean their smaller peers offer wider margins of safety at the present time.

The company’s performance puts it in the top quartile of its sector over the last three years. Despite its strong performance, it continues to trade at a 10% discount to its NAV. This suggests there could be even greater capital growth potential on offer. It also has a dividend yield of 2.3%, which is only 30 basis points lower than inflation at the present time. The trust aims to keep dividend growth as close to inflation as possible in the long run, which could make it of interest to income investors.

However, the main focus of the Mercantile Investment Trust is capital growth. Holdings such as Bellway, Auto Trader and Just Eat mean that it has the potential to deliver further outperformance of the FTSE 100 in the next five years.

Value focus

Also offering upside potential in the long run is the Jupiter UK Growth Investment Trust (LSE: JUKG). It has delivered a total return of 69% during the last five years. This puts it well ahead of the FTSE 100’s performance during the same time period. Despite this, it trades at a 3% discount to its NAV and this indicates it could offer further upside over the medium term.

The trust has a number of value opportunities within its major holdings. For example, its top 10 holdings include companies such as Lloyds and Barclays – both of which trade on relatively low price-to-earnings ratios.

Similarly, stocks such as Taylor Wimpey and IAG could deliver long-term growth because of low valuations which have been brought about by uncertain market conditions. And with a number of smaller companies included within its holdings, the trust has exposure to potentially fast-growing areas, too. Therefore, it could deliver further outperformance of the FTSE 100 in the long run.

The post 2 fast-rising investment trusts that could make you a millionaire appeared first on The Twelfth Magpie.