Trustnet Magazine 60 March 2020 | Page 40

In focus This trust has been described as “essential” for investors in retirement who are looking to generate strong income from their portfolio Dunedin Income Growth TRUSTNET These smaller holdings still have the same quality characteristics that Dunedin Income Growth has always favoured, such as being run by superior management teams and operating in industries with high barriers to entry. Top holdings include income favourites such as GlaxoSmithKline and British American Tobacco. Its biggest sector exposure is to financials, followed by healthcare, consumer goods and industrials. In an update before the coronavirus sell-off, Kernohan and Ritchie said: “Given potentially volatile markets ahead and relatively full valuations, we see little reason to shift from a conservative focus on higher quality businesses.” FACT BOX MANAGERS: Louise Kernohan & Ben Ritchie / LAUNCHED: 01/02/1873 / DISCOUNT/PREMIUM: -3.2% / OCF: 0.63% CROWN RATING PERFORMANCE OF TRUST VS SECTOR OVER 5YRS IT UK Equity Dunedin Income Growth Income (15.55%) Investment Trust (32.62%) 50% 40% 30% 20% 10% 0% -10% 16 -20% quarterly income. Dividends are paid in February, May, August and November, which is good for providing smooth dividend flows within a portfolio.” FE Analytics shows the trust has paid out an income of £2,258.98 over the past five years on an initial investment of £10,000. This is the sixth-highest payout in the IT UK Equity Income sector, beating the likes of Finsbury Growth & Income, Temple Bar, Edinburgh and City of London investment trusts. Over recent years, Kernohan and Ritchie have evolved the trust's strategy, focusing more on dividend growth and less on the initial yield. This means the managers have been selling out of stocks with high dividends that have limited prospects of increasing, while tilting the portfolio towards the small- and mid- cap end of the market. I ncome investors are often warned to look not just at high headline yields, but the prospect of dividend growth as well. Dunedin Income Growth is a trust that ticks both of these boxes. The trust is managed by Louise Kernohan and Ben Ritchie, with the aim of providing a quarterly income and long-term capital growth. In terms of total returns, it is the best performer in the IT Equity Income sector over the past three years, with gains of 30.89 per cent; the trust is also in the top quartile over one and five years, and in the second quartile over the past decade. Philippa Maffioli, senior adviser at Blyth-Richmond Investment Managers, said: “Dunedin Income Growth is essential for an income- hungry retiree. It contains a selection of high-quality UK and overseas companies, delivering a resilient [ PENSION ] 40 / 41 Source: FE Analytics trustnet.com