£10,000 annual income from investment trusts

aajax42

Money Observer -How to earn a £10,000 annual income from investment trusts.
Being an absolute beginner, I have followed with interest many posts on here re investment strategies. Passive vs active, best platforms, well balanced etc. I am hoping to generate an income to supplement my small pensions and this looked very attractive, given I have around 250k to invest. I have provided a link to their model portfolio's, last years and this years re-balanced and wondered what you think?
http://www.moneyobserver.com/portfolio-ideas/how-to-earn-10000-annual-income-investment-trusts

sorcerer

I have build my own investment income portfolio, made up of both investment trusts and open ended funds. And whilst i also own at least 3 of those securities, if your intention is to use the money for income, most investment trusts are loaded on a quarter divdend on Feb,May,Aug,Nov. Which means you could be short of cash the other months.


I would be worried about the dividend cover, it looks kind of low.

EdGasket

You can pay some hefty charges with investment trusts. Why not just see what the top 10 investments are in the trusts and buy some of those shares directly and cut out the middleman i.e. the investment trust. For foreign shares though it would be more cost effective to use a fund.

Also look at income/dividend ETFs which will have lower charges than ITs e.g. IUKD, IAPD, SEDY etc.

Linton

In the past year my income S&S ISA provided £8600 natural inome from £140K of dividend/interest paying investments:

The major geographic allocations are:
62%UK
13% Asia
14% Europe

Shares
Juridica - nearly dead!
Man - Not much better
Carillion
Phoenix
Kier Group PLC
Galliford
Marstons
Sainsbury
Scot & Southern Energy
Interserve
Vodaphone
National Grid
United utilities
Beazley
Chesnara
HSBC
Glaxo
Shell

Funds
JPM Global EM Income IT
Threadneedle Emerging Bonds I Inc
Schroder Asian Inc Max Z
Schroder Global Property Income Maximiser Z Inc
L&G High Income Trust X Gross Inc
European Assets Trust IT
Legg Mason Income Optimiser
Princess Private Equity

I am withdrawing money from my pension and adding to the income portfolio funds with the aim of reducing the UK to around 50%.

TCA

You might be interested in Luniversal's B7 and B8 Baskets of Investment Trusts as posted on the Motley Fool website.

B7 (yield at review date of 3.4%):
Bankers (BNKR)
F&C Capital and Income (FCI)
JPM Claverhouse (JCH)
Lowland (LWI)
Mercantile (MRC)
Murray International (MYI)
Perpetual Income & Growth (PLI)

Annual Review: http://boards.fool.co.uk/basket-of-seven-annual-review-2016-13382736.aspx?sort=whole#13382736

B8 (yield at review date of 4.3%):
City of London (CTY)
Dunedin Income Growth (DIG)
Edinburgh (EDIN)
Invesco Income Growth (IVI)
Merchants (MRCH)
Murray Income (MUT)
Schroder Income Growth (SCF)
Temple Bar (TMPL)

Annual Review: http://boards.fool.co.uk/basket-of-eight-annual-review-2016-13435673.aspx?sort=whole#13435673

TCA

Here is also a link to another investment trust income portfolio, with several additional posts with further suggestions:

http://www.lemonfool.co.uk/viewtopic.php?f=54&t=2749

These are the constituents and the (high) yields below. By the way, this isn't a recommendation, just an example for comparison:

Aberdeen Latin American Income (ALAI) 5.0%
Blackrock Income Strategies (BIST) 6.1%
Blackrock Commodity Income (BRCI) 6.8%
Henderson Diversified Income (HDIV) 5.5%
Henderson Far East Income (HFEL) 5.7%
Henderson High Income (HHI) 5.0%
HICL Infrastructure (HICL) 4.6%
John Laing Infrastructure Fund (JLIF) 5.2%
Merchants Trust (MRCH) 5.3%
Murray International Trust (MYI) 4.1%
New City High Yield Fund (NCYF) 7.0%
Real Estate Credit Investments (RECI) 6.5%
Shires Income (SHRS) 5.5%

aajax42

Hi Linton, sounds like a great return, but having the expertise and courage to select those individual companies is a step too far for a newbie like me.:eek:

coastline

few more ideas...

http://moneyweek.com/an-update-on-moneyweeks-model-portfolio-july-2016/

http://maverickmoneyuk.com/investing/31349-2/

https://www.trustnet.com/News/609124/investment-trusts-to-build-a-monthly-income-portfolio

https://www.trustnet.com/News/494371/fe-trustnets-portfolio-of-high-yielding-investment-trusts

pinkllama

Don't all the investment trusts listed to give an income of £10k have an average fee of approx 1%? making the income about £7.5k p.a if not less?

Linton

pinkllama wrote: »

Don't all the investment trusts listed to give an income of £10k have an average fee of approx 1%? making the income about £7.5k p.a if not less?

Performance and yields are after charges/fees. Charges arent something you pay on top.

bowlhead99

pinkllama wrote: »

Don't all the investment trusts listed to give an income of £10k have an average fee of approx 1%? making the income about £7.5k p.a if not less?

No, the £10,000 income they are talking about is the income *you* get after they have covered their running costs and decided to send you £10,000.

In some cases the £10,000 can be more than the interest and dividend income that they get from the companies in which they invest, but they can also distribute their capital gains profits as well, if they want.