"income" investment funds

MadMat

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

InvesterJones

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

In the long run equities have provided the best chance at beating inflation, as long as you can hold them long enough to ride out downturns. It might be worth considering a combination so that you can take from gilts or whatever if needed and leave the equities to recover - but I think to be any more specific might be going down the route of tailored advice which we can't provide - possibly time for a friendly IFA  

NedS

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

Beddie

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

wmb194

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

Yup, have a look here: 

https://www.theaic.co.uk/income-finder/dividend-heroes

https://www.theaic.co.uk/aic/find-compare-investment-companies?sec=UGI&sortid=Name&desc=false

ColdIron

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

EDIN is an obvious one for UK Equity Income, and maybe HHI if income is a priority

Perhaps MYI for global and JGGI for more growth

There is plenty of choice. You just have to marry up your desire for yield vs growth. The AIC has a table of 'Dividend Heroes'
https://www.theaic.co.uk/income-finder/dividend-heroes

And a good screener
https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false

Linton

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

I hold AEW UK REIT,  GCP and Sequoia Infrastructure funds and European Assets Trust. All generate significantly higher yield than CTY.  On the other hand there is no expectation that the income will rise with inflation and therefore one needs a separate growth portfiolio to buy further income shares from time to time.

EAT is unusual in that it is essentially a growth oriented European Medium/Small Companies fund but is managed so as to provide a sustainable ongoing income.  ITs are not subject to the rules followed by OIECs which have to match fund dividends with the income generated by the underlying investments.

wmb194

Linton said:

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

I hold AEW UK REIT,  GCP and Sequoia Infrastructure funds and European Assets Trust. All generate significantly higher yield than CTY.  On the other hand there is no expectation that the income will rise with inflation and therefore one needs a separate growth portfiolio to buy further income shares from time to time.

EAT is unusual in that it is essentially a growth oriented European Medium/Small Companies fund but is managed so as to provide a sustainable ongoing income.  ITs are not subject to the rules followed by OIECs which have to match fund dividends with the income generated by the underlying investments.

EAT's gone soon, it's to merge in c.October 2025 with Janus Henderson's ESCT (European Smaller Companies Trust plc).

https://www.janushenderson.com/en-gb/uk-investment-trusts/trust/the-european-smaller-companies-trust-plc/

Linton

wmb194 said:

Linton said:

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

I hold AEW UK REIT,  GCP and Sequoia Infrastructure funds and European Assets Trust. All generate significantly higher yield than CTY.  On the other hand there is no expectation that the income will rise with inflation and therefore one needs a separate growth portfiolio to buy further income shares from time to time.

EAT is unusual in that it is essentially a growth oriented European Medium/Small Companies fund but is managed so as to provide a sustainable ongoing income.  ITs are not subject to the rules followed by OIECs which have to match fund dividends with the income generated by the underlying investments.

EAT's gone soon, it's to merge in c.October 2025 with Janus Henderson's ESCT (European Smaller Companies Trust plc).

https://www.janushenderson.com/en-gb/uk-investment-trusts/trust/the-european-smaller-companies-trust-plc/

Thanks, hadn't seen that.  The referenced documentation says that the combined IT will target a Yield of 5%, compared wuth the current ESCT Yield of 2.something.  I will wait to see what happens.

NedS

Beddie said:

NedS said:

MadMat said:

Ideally I'd be holding it "forever" along with a little capital growth. and taking a little bit of income off of it    As I said in the original post,  I have a small pension (approx 30k lump sum and £4.5k per year) which I'm planning to put into payment on my 55th birthday to fund a reduction in my working hours . . . 

As a forever holding that pays a regular (and increasing) income combined with some capital growth to retain the real world value of your investment, I'd look at something like City of London investment trust (CTY). Currently pays ~4.3% as a quarterly dividend and has a 58 year history of raising it's dividend annually meaning your income has a chance of keeping pace with inflation.

Best to buy during a market crash as you'll pay less and get a higher initial dividend yield (I bought heavily during Covid and it's performed excellently). There are normally 2-3 decent opportunities to buy each year, use a money market fund to hold cash whilst you wait.

I like Investment Trusts - are there any others you use for income as well as CTY?

Yes, lots. I hold around 20 trusts as part of a diversified income portfolio, but CTY probably best exemplifies an income fund I'd be happy to "hold forever" with "a little capital growth" as stipulated by the OP. It's also currently the largest holding in my income portfolio at 25%

Total cumulative return of 93% (dividends reinvested) over 5 years (which is actually higher than a global equity tracker and matches the S&P500), or a 53% capital return (share price) excluding dividends paid, and is now paying me a 6.55% dividend based on my purchase price just over 5 years ago thanks to the dividend growth.

Look back on my posts here from ~5 years ago when I was buying CTY - everyone thought I was mad and there was no love for an income strategy so I'm pretty happy to have out-performed a global tracker and matched the returns of the highly concentrated S&P500 with less risk and volatility (past performance not indicative of future returns)