The alternative asset investment trusts yielding over 5%

Fourteen interest rate rises from the Bank of England since December 2021 have added up to a challenging time for alternative asset investment trusts, with discounts widening across the board.

However, pressure on share prices has led to higher yields, offering opportunities that could appeal to investors willing to take some risk. The Association of Investment Companies (AIC) has published a list of the 39 investment trusts that invest in alternatives¹, yield at least 5% and have delivered a positive share price total return over the past five years.

Yields are based on the dividends paid in the last complete financial year, divided by the current share price. There is no guarantee dividends will be maintained.

A third of the trusts on the list (13 out of 39) invest in infrastructure, including nine from the Renewable Energy Infrastructure sector and four from the Infrastructure sector. The highest yielding of these is Gore Street Energy Storage Fund, with a yield of 9.9%, followed by NextEnergy Solar Fund yielding 9.5% and Gresham House Energy Storage yielding 8.5%.

The next biggest group is made up of 11 trusts investing in debt. These include some of the highest yielding trusts on the list, including Marble Point Loan Financing yielding 17.0%, Fair Oaks Income 2021 yielding 14.3% and Chenavari Toro Income Fund yielding 13.6% - all from the AIC Debt – Structured Finance sector.

Eight trusts on the list invest in property, including property debt. The highest yielding property investment trust is Real Estate Credit Investments, with a yield of 9.8%.

The remaining seven trusts comprise three in the Leasing sector, three in the Private Equity sector, and one in the Hedge Funds sector.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Alternative income investment trusts grew rapidly during the period of ultra-low interest rates, but the picture has changed over the past couple of years as central banks have raised rates to try and contain inflation. This list shows how many investment trust discounts have widened as investors have sought yields that compete with bonds and cash.

“Although the list contains several long-established trusts with good track records of paying dividends, there are no guarantees. Investors should use this list as a starting point for their own research only, and if in doubt, should consult a financial adviser with experience in investment trusts".

The highest yielding alternative asset investment trusts

Source: theaic.co.uk / Morningstar (to 19/01/2024). Includes investment trusts in alternative asset sectors with a yield of at least 5% and positive share price total return over the past five years. Excludes VCTs. A hyphen (-) denotes no performance data. Table excludes investment trusts where wind-up, merger or restructuring plans have been proposed.

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Notes to editors

1. For the purposes of this release, investment trusts are considered to invest in alternative assets if they do not belong to the equity sectors or Flexible Investment sector. VCTs are excluded.
2. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 341 members and the industry has total assets of approximately £268 billion.
3. For more information about the AIC and investment trusts, visit the AIC’s website.
4. 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.
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