Investment company sectors yielding 3% or more (2017)

With interest rates still low and investors on the search for income, the Association of Investment Companies (AIC) has published a list of those investment company sectors that yield 3% or more, as at the 30 September 2017.

The top two sectors are yielding well over 6%, with Sector Specialist: Leasing topping the list with an average yield of 6.9%, while Sector Specialist: Debt follows close behind with an average yield of 6.5%. Sector Specialist: Infrastructure – Renewable Energy is the third highest yielding sector, with an average yield of 5.7%.

The list doesn’t just feature investment companies investing in illiquid assets though, with UK Equity & Bond Income, Global Equity Income, UK Equity Income and Private Equity all yielding over 3%.

The full list features 13 investment company sectors with a dividend yield of 3% or more and currently seven sectors are on a discount to Net Asset Value (NAV).

Commenting on the list, Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said: “There is speculation that an interest rate rise may take place in November but even if this happens interest rates remain historically low.  This is reflected by the strong investor appetite for income and a number of higher yielding specialist sectors are on a premium. The closed-ended structure is particularly well suited to investing in illiquid assets and these benefits were highlighted by the problems of the open-ended property funds after last year’s referendum.

“Investors should be aware that sentiment can change and that income from investment companies is not guaranteed.  Investors should not buy on the basis of the headline yield alone. There’s a broad spectrum of risk and reward, so it’s crucial that investors do their homework, take a long-term view and if necessary, seek financial advice.”

Investment company sectors yielding 3% or more at 30 September 2017

Source: AIC using Morningstar

* Weighted average includes 9% distribution from Electra Private Equity. Private Equity sector (excl. 3i) average dividend yield at 17 October 2017 is 3.1%.

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Notes

1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 351 members and the industry has total assets of approximately £171 billion.
2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.