10 Investment Trusts for £100k SIPP pot?

mark13

A few to consider , L&G Battery chain , Smithsons. BG Positive change.

[Deleted User]

mark13 said:

A few to consider , L&G Battery chain , Smithsons. BG Positive change.

Only Smithsons is a IT, BG positive change is a OEIC, the IT version is Keystone Positive Change 

Linton

bostonerimus said:

Alexland said:

NannaH said:

Are there advantages to using ITs instead of other funds when it comes to drawdown?

ITs can smooth the dividends such that they can pay a steady increasing dividend each year. They do this by creating an accounting entry called a revenue reserve in the good years to be distributed in bad years where the underlying holdings are unable to pay enough dividends to cover the whole trust's growing dividend. Even if that fails they can draw upon their capital reserve to pay income although the board and management know shareholders would not want to see this happen.

In current market conditions you can sustainably draw a nearly 2% smoothed yield from a global income IT and a nearly 4% smoothed yield from a UK income IT. Some trusts pay more but then you need to consider if they are likely to generate enough capital growth to keep up with inflation. You also need to consider if the dividend increases are likely to keep up with inflation.

NannaH said:

We have SM in DH’s SIPP portfolio but it’s currently 5% of our total investments and the yield isn’t good,  if that matters?

SMT is focused on growth so has a low yield although technically it has been increasing it's very modest dividend for 39 years so is an AIC dividend hero.

You can do exactly the same yourself in a sensible Total Return withdrawal strategy. There is no magic to ITs or Wealth Preservation funds.

Well yes, you can manage a dynamic cash pool yourself to convert variable investment gains into steady income if you devoted time and effort to doing so, together with allocating the appropriate % of your assets.  Much the same as you could do away with funds completely and invest directly.

 Overall it should be more efficient, cheaper and effective for ITs to do it on the large scale as part of their day to day fund management than for thousands of individual investors to set up their own processes with their own individual cash pools. Yes some keen investors will want to do it but for the majority of retirees with limited knowledge and experience I can’t see diy in this area being the best solution.