The search for yield...

Having followed Bond, PIB and preference share prices over the past year or so, I now realise that it is becoming increasingly difficult to obtain much in the way of decent yield without paying over the odds (Leeds or Skipton PIB for example) or taking a capital risk (EnQuest 5.5%).

I notice there are one or two investment trusts currently paying decent dividends (a couple I noticed are Duel Real Estate Finance and Fair Oaks Income Fund). I am not too familiar with investment trusts but on the face of it both of these seem to be paying decent (and regular) dividends.

Any thoughts would be appreciated.


  • My first thought is where on earth did you dig those up from and what attracted you to them? These seem quite obscure companies and for the first I could only find something listed in Switzerland. There are many investment trusts that produce income but you need to do a fair amount of research and fully understand them before considering investing. It is difficult to get that on a public forum
  • Citywire did a piece on Fair Oaks...

    My favourite paragraph is 'Fair Oaks invests in the junior and so-called equity tranches that rank at the bottom of the structure.' Followed a little further down by 'The equity tranche bears the first loss when something goes wrong.'

    Good luck!
  • I think the main point to consider here is that investment trusts have the same issues alluded to in the initial post. All those with safe, secure income streams have been bid up to high valuations in exactly the same way as retail bonds and anything else that produces income. So if you want a high income you end up looking at the investment trust equivalent of the Enquest bonds you mentioned I'm afraid.

    In fact here is a good example for you to ponder CYN (City Natural Resources High Yield) 6.5% yield, looks pretty safe, Investors Chronicle Top 100 fund, won all sorts of awards when resources stocks were in favour and was a great performer . . . but would you buy it now? The share price has fallen from over £2 to 85p and who knows in the short term it could drop further which will soon wipe out any income . . . or maybe it will rise, I certainly have no idea and this is the kind of issue you will face.
  • Dear Frugal,

    Thank you for your thoughts...I will certainly carry out some DD on CYN. Two other thoughts for yield are a couple of BlackRock investment trusts: Commodities and World Mining. A basket of miners and explorers seems a much safer punt than one firm. Both trusts are quoting an historic yield of +9% which BlackRock state they intend to maintain.

    Perhaps I ought to stick with Paragon!
  • With present uncertainties, I would tend to suggest sticking to cash!
    Not the best timing to start any major investment in either equities or bonds.
  • Mr Skill, if that is your risk tolerance, I'd rather take a punt on the Enquest bond than invest in the first two trusts you mentioned or in any trust biased towards Mining sector.

    For income, there are some trusts trading at a discount, albeit these are multi-asset or equity: BIST, Temple, JIGI. I quite like IUKD ETF as well.
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