Diverse Income Trust: Long-term Dividend And Capital Growth
Edison | Apr 09, 2018 07:43AM ET
Diverse Income Trust PLC (LON:DIVI) seeks to provide shareholders with an attractive level of dividends and capital growth over the long term. It achieves this through investing primarily in UK-listed companies that are able to improve productivity, where strong cash flow can underpin sustained dividend growth. The managers Gervais Williams and Martin Turner believe a multi-cap approach has the advantage of investing over a wider opportunity set relative to those limited to large mainstream stocks, and around two-thirds of DIVI’s holdings are outside the FTSE 350. The strategy also seeks to manage the scale of potential capital loss, in the event of a major market setback, through the use of a FTSE 100 put option. DIVI has a solid track record of performance; from inception in April 2011 to end February 2018, it has generated an annualised total return of 13.8%.
Investment strategy: Fundamental, unconstrained
DIVI is focused on finding companies with durable long-term dividend growth. These firms typically have strong balance sheets, conservative managements and are attractively valued. Unconstrained by a benchmark, the managers are free to invest across the whole market-capitalisation spectrum, and currently tend to find many of the better investment opportunities among small-cap income stocks. The investment approach is bottom up and the managers meet around 70-80 companies each month. DIVI’s portfolio is well diversified, consisting of around 150 holdings across 11 sectors. Were there a significant market correction, the trust has an undrawn gearing facility so it can fund extra investments prior to any future market recovery.
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