Picture of The Greybear who is exploring an income strategy in retirement based around investment trusts.

Long time readers may remember that as I’ve written on Monevator many times, a few years ago I began repositioning my main SIPP towards income-centric investment trusts.

Mostly, this meant selling various passives and some funds, and replacing them with investment trusts.

This isn’t the place to reprise the merits or otherwise of that strategy.

Previous articles by me have:

For me it boils down to a combination of in-built diversification, (mostly) reasonable charges, and a proven investment model that in many cases goes back over a hundred years.

To which I might add that in some cases, investment trusts also offer access to asset classes that would otherwise be problematic for ordinary investors.

These days, for instance, my own portfolio features large-scale industrial and warehouse properties in the form of Tritax Big Box, and solar and wind farms in the form of Bluefield Solar Income and Greencoat UK Wind.

Terra incognita

Whatever their merits, investment trusts have historically faced an uphill struggle for mindshare among investors.

The financial press, for instance, has traditionally fêted open-ended funds, for reasons not unconnected to the amount of advertising that such funds undertake.

When soliciting interviews with active managers, the same logic applies.

Investment advisors, too, were slow to tout the attractions of investment trusts. The arrival of RDR back in 2014 and the demise of a number of cosy commission-based arrangements has changed that a little, but more needs to be done.

And – it has to be said – the venerable nature of a number of investment trusts hasn’t helped to bring about a nomenclature that appears investor-friendly to modern eyes.

The Scottish Mortgage investment trust, for instance, is nothing to do with mortgages, and the last time I looked it had no investments in Scotland. To be blunt, the name does little to hint at index-beating major investments in Facebook, Google-owner Alphabet, Tesla, Amazon, Alibaba, Tencent, and other digital illuminati.

Put another way, investment trusts can be something of an unknown for many ordinary investors, with relatively few sources of worthwhile information.

New, better, bigger

Hence, back in 2015, I created a Monevator-published table of income-centric investments trusts, which became something of a popular resource.

Further updated in 2016, it was actually in the process of receiving a 2017 refresh when, as they say, real life got in the way.1

And somehow, here we are in 2019.

The 2019 table, updated at long last, contains a small number of improvements. Three, to be precise.

  • It includes many more investment trusts – roughly twice as many.
  • I’ve included a number of ‘specialist’ trusts, as well as property-centric trusts, not least because these asset classes now figure fairly prominently in my own investments.
  • Following reader suggestions, trusts are categorised and grouped together: UK-centric, global and international, specialist trusts, and property-centric trusts.

Click through to view the cloud-hosted investment trust table in a new window.

(Click through to see Greybeard’s table of trusts.)

The small print

There are four observations to make on the 2019 bunch of trusts.

The first is that among those trusts that featured in the 2016 list, costs are down: 18 trusts had a lower reported ongoing charge; four were the same; and two appeared to have slightly increased it.

Second, of the trusts listed, 24 feature among my own investments, with two more earmarked for purchase soon.

Third, to be included in the table trusts had to be a member of trade body the Association of Investment Companies, which means that a number of REITS that would otherwise make this list have been excluded. Among my own investments, for instance, are Primary Health Properties, Empiric Student Property, and Tritax Eurobox. These do not feature in the table.

Fourthly and finally, the SIPP in question which holds these trusts is now significantly larger, after two other pension investments have been rolled-up into it in order to cut costs and improve performance.

There’s still a fairly hefty five-figure sum in funds, but for me at least, the strategy of moving into income-centric investment trusts is delivering the goods.

Naturally this information is only provided as a starting point for Monevator readers doing their own research: If you invest in any of them, on your head be it!

Of course I hope it’s useful, and look forward to any comments. It’d be especially interesting to see an outline of the portfolio of any readers using investment trusts in retirement, if you’d care to share?

See all The Greybeard’s previous articles.

  1. My friend is now fully recovered from his heart attack and subsequent coronary bypass, and now regularly trounces me at our weekly exercise class.

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