By Annabel Brodie-Smith
It’s the most beautiful sunny spring day but Trump’s tariffs are taking their toll on markets. T.S. Eliot’s emotive words, “April is the cruellest month” ring true today.
“It’s the most beautiful sunny spring day but Trump’s tariffs are taking their toll on markets. T.S. Eliot’s emotive words, “April is the cruellest month” ring true today.”
No-one quite knows what the long-term impact of Trump’s tariff’s will be but the predictions are for higher inflation and reduced growth. It’s just as well our investment expert, Ian Cowie is explaining the “Trump slump” this month. He explains why he is staying invested in two investment trusts which invest mainly in the US, Polar Capital Technology Trust and Worldwide Healthcare Trust.
Of course, there will be winners and losers from tariffs. Ian thinks US medium-sized companies which focus on their domestic economy could benefit from ‘America first’ protectionism. In this context, he mentions JPMorgan US Smaller Companies. Ian also reminds us that “news events can also surprise on the upside.” Trump’s calls for Europe to spend more on defence might boost demand for Seraphim Space Investment Trust, where three quarters of the portfolio is defence related.
And staying with defence, the UK announced increased spending in the Spring Statement. Please do take a look at our list of investment trusts with most exposure to well-known defence stocks. Schroder UK Mid Cap Fund has the most exposure to these stocks (10.9%), and their manager, Jean Roche believes “…we are at the start of a defence growth supercycle.”
“This month, income is an important theme, as we reveal this year’s dividend heroes – the investment trusts which have increased their dividends consecutively each year for more than twenty years.”
This month, income is an important theme, as we reveal this year’s dividend heroes – the investment trusts which have increased their dividends consecutively each year for more than twenty years. These ‘dividend hero’ trusts have shown remarkable resilience, continuing to raise their payouts during recent and historic high inflationary periods in the 1970s, the recession of the 1990s, the global financial crisis in 2008 and the pandemic.
Investment trusts can retain up to 15% of the income they receive each year, and this reserve of income can be used to boost dividends when markets are tough. This allows investment trusts to smooth their flow of dividends and produce these long records of dividend growth.
This year’s new joiner to the club is Murray International from the Global Equity Income sector which is currently paying a 4.6% yield. This brings the list of dividend heroes back up to 20 trusts after last year’s merger of two companies to form Alliance Witan. We have also included a link to our next generation of dividend heroes which are investment trusts which have increased their dividends consecutively for more than ten years but less than 20.
And the hunt for income continues as we discover the 26 investment trusts which yield more than 5% and have not cut their dividends in the past ten years. There is some crossover as three of these trusts are also dividend heroes – abrdn Equity Income, Merchants Trust and Athelney Trust. This is a helpful list for investors looking for diversification – covering asset classes from UK and global equities to infrastructure, debt, renewable energy, property and even private equity. Of course, higher yields can come with a higher risk profile, so investors need to do their homework before investing.
Finally, do watch Moira O’Neill, a freelance investment journalist whose work is often seen in the Financial Times, talk to the AIC’s Nick Gardner. She explains how she encourages people to take the plunge and invest and why she likes investment trusts. She talks in detail about why she invests in F&C Investment Trust and City of London Investment Trust - it’s well worth watching.
Well whatever the markets do, I fully intend to overdose on chocolate and hot cross buns during the Easter holiday. My legendary Easter egg hunt will be taking place in the garden – a welcome rest from revising for my eldest son, Alex as the dreaded A Levels approach and a chance for my chocoholic younger son, Fabian to indulge. You are never too old for an Easter egg hunt!
“…whatever the markets do, I fully intend to overdose on chocolate and hot cross buns during the Easter holiday.”
I’d like to wish you all a Happy Easter.
Kind regards
Annabel Brodie-SmithCommunications Director, AIC
