F&C Managed Portfolio Trust, a multi-manager investment trust launched last year to invest in closed-ended investment companies, has been building positions in Asian and other non-U
F&C Managed Portfolio Trust, a multi-manager investment trust launched last year to invest in closed-ended investment companies, has been building positions in Asian and other non-UK income funds in the search for attractive yield opportunities.
Peter Hewitt, the Edinburgh-based manager of the trust, points out that the slide in sterling against other major currencies has significantly added to the attractions of overseas yield-generating funds for sterling-based investors.
In the hunt for dividends, F&C Managed Portfolio Trust has recently taken a new stake in Henderson Far East Income.
F&C Managed Portfolio Trust, while not a split-capital trust, has two pools of assets – one for income and one for growth.
A unique feature of the trust is that net income generated from holdings in the growth portfolio is transferred to the income portfolio in exchange for a capital contribution of an equivalent amount, providing a cost and tax-efficient means of reinvesting income for growth investors, and enhanced yield for income-seekers.
The income pool sits in the global growth and income sector, where it is currently first out of seven trusts year-to-date.
The fund’s portfolio is predominantly invested in equities, with more than a third in overseas stocks.
Asian equity exposure now accounts for 12 per cent of the income portfolio, against 46 per cent in the UK.
The portfolio has a forecast yield of 7.75 per cent for the year to 31 May. The company says its overseas holdings are key in maintaining this in an environment where UK dividends are under pressure as the economy stalls.
A major holding is European Assets Trust, an F&C-managed small and mid-cap specialist trust that accounts for 4.5 per cent of the income portfolio and has a yield of six per cent. This compares with an average yield on FTSE All-Share stocks of 5.1 per cent.
Hewitt says: "The opportunity base for income investors in overseas investment trusts has widened considerably – you can now get quite a few overseas trusts with a decent income. In the Far East (excluding Japan), as companies have become more interested in paying dividends, there are three quite chunky trusts to choose from. I now have positions in all three of these trusts."