Premier Miton Diverse Income Trust marks 10-year anniversary
Premier Miton Investors' Diverse Income Trust has marked its 10 year anniversary with returns since inception ranking it as one of the top performers in its peer group.
The fund has been managed by Gervais Williams and Martin Turner since launch.
The Trust’s objective is to provide shareholders with an attractive and growing level of dividends coupled with capital growth over the long term. It invests primarily in quoted or traded UK companies with a wide range of market capitalisations and has a long-term bias toward small and mid-cap equities. The Trust may also invest in large cap companies, including FTSE 100 Index constituents, where it is believed that this may increase shareholder value.
Over the last 10 years The Diverse Income Trust has delivered a capital appreciation of 144 per cent in its share price since it was launched on 28 April 2011. This compares to a 26 per cent increase for the FTSE All-Share Index, and an increase of just 0.5 per cent for the FTSE Higher Yield Index.
When the dividend income is included, The Diverse Income Trust has delivered a total return of 245 per cent to shareholders versus 81 per cent for the FTSE All-Share Index, and 66 per cent for the FTSE Higher Yield Index.
The Trust has also significantly outperformed its peer group, the Investment Trust UK Equity Income sector, over periods such as one, three, five and 10 years for example.
As at 30 April 2021, the net assets of the Diverse Income Trust totalled GBP421 million and it has a historic dividend yield of 3.15 per cent. The Trust was recently included in Interactive Investor’s Super 60 range.
Gervais Williams, Head of Equities at Premier Miton and co-manager of The Diverse Income Trust, says: “The Diverse Income Trust is unusual in that it doesn’t have a formal benchmark such as a stock market index. Instead, it invests across a multi-cap portfolio of quoted stocks with an objective to grow its dividend income to shareholders at a faster rate than others. As the rising dividend income comes through, this tends to be reflected in a rising valuation of the portfolio holdings as well, so the Trust has delivered both a stream of growing dividends and premium capital appreciation since launch.
“In the 10 years since the launch of The Diverse Income Trust, it has already paid out dividends that in aggregate are a substantial portion of the initial issue price of 50p. This means original investors have already had much of their original upfront capital returned to them in income payments alone.
“Alongside, over the last 10 years when UK equity income strategies have been somewhat out of fashion, The Diverse Income Trust has also delivered plentiful capital appreciation.
“Furthermore, it may sound cliched, but the nature of the returns from The Diverse Income Trust strategy may become of much greater relevance to a much wider range of investors going forward:
First, its multi-cap approach includes all the profitable businesses generating surplus cash for shareholders, so it tends to be much less reliant than other approaches on a narrow range of stocks or sectors. Indeed, since the investment universe includes younger income stocks, it also provides a degree of resilience because many operate in immature markets that can sometimes continue to prosper even during global recessions, or through periods when corporate taxes are increasing. Effectively, the broad opportunity set of The Diverse Income Trust maximises its potential to pay out a superior stream of long-term dividends compared with others.
“Second, The Diverse Income Trust offers genuine diversification. Strategies reliant on the capital appreciation of asset markets can be vulnerable when stock exchanges stall, as they did for Japanese investors for example from 1989 onwards. In contrast, a strategy like that of The Diverse Income Trust, with a premium dividend yield, has the potential to continue delivering a sustained and growing return even when asset markets flatline.
“Third, as long-dated bond yields have now fallen to ultra-low levels, investors may become much more attentive to active strategies given their potential to generate a return independent of the underlying movement of markets. Strategies like The Diverse Income Trust that have a strong record of delivering added value through active stock selection could become much more popular.
“Hence, as The Diverse Income Trust plc successfully completes its first 10 years, we believe it may be on the threshold of becoming of much greater relevance to a much wider range of investors in the coming 10 years.”