Global equities

The Brunner Investment Trust (LSE: BUT) is one such fund. With shares trading at a discount of 12% against its net asset value per share of 844p, prospective investors have the opportunity to pick this global equities trust for less than the sum of its parts.

This doesn’t seem like a big discount in comparison to some other trusts, but it does look unwarranted given that the fund owns a highly liquid portfolio of global equities and has a relatively low ongoing charges ratio of 0.73%.

Capital and dividend growth

The fund aims to provide its investors with both capital growth and growing dividends by investing in companies all over the world, seeking out opportunities for growth and reliable dividends wherever they may be. It has 45 years of consecutive years of dividend increases under its belt, giving it one of the strongest track records of dividend growth in the investment companies sector.

With a portfolio of 74 stocks, Brunner has a well-balanced portfolio, with no sector accounting for more than a quarter of its total asset value. Big positions include Royal Dutch Shell (3.1%), Microsoft (3%), Abbvie Inc (3%), UnitedHealth (2.9%), and BP (2.2%).

Multi-manager strategy

Alliance Trust (LSE: ATST) has an even longer track record of boosting shareholder payouts, with 50 years of consecutive dividend growth. That’s an impressive feat, but what really sets it apart from its peers is its unusual investment strategy.

After years of lagging investment returns, the company has shaken up in its strategy by adopting a new multi-manager model. Although there are a few other investment companies which also utilise a multi-manager approach, they tend to suffer from closet tracking and high costs.

Alliance Trust intends to overcome flaws in the traditional multi-manager model, by targeting ongoing charges ratio at below 0.65% — less than half the typical ongoing charges figure for a multi-manager fund. It also intends to avoid over-diversification, which brings closet tracking, by hiring external managers to select only high-conviction picks with specific investment objectives, reducing its likelihood of generating index-hugging performances.

Investment performance

It’s too early to see whether this change in its investment strategy would deliver outperformance for shareholders over the long term. So far though, the results are encouraging. The fund reported a net asset value total return of 11.8% since the change in strategy in April 2017. This compares favourably against the 8.2% return from its MSCI All Country World Index benchmark over the same period.

Alliance Trust currently trades at 6% discount against its NAV, with shares in the fund yielding 1.7%.

Half a century of increases 

A great example is the Brunner Investment Trust (LSE: BUT). This investment group, which reported its results for the year to the end of November this morning, has paid a dividend to investors for 46 years and it has increased the payout every single year. Today management continued this record, announcing a 4.4% increase in the total payout for the year to 16.5p, well covered by earnings per share of 18.4p. The increase, coupled with the firm’s record of steady payout growth, shows how valuable investment trusts can be for income investors seeking a steady income that’s growing in line with inflation.

The full-year distribution suggests a dividend yield of 2.2% which is hardly high-yield territory, although I believe that the record of payout increases more than makes up for this. 

Brunner is well diversified with three of its top five holdings based in the US and more than two-thirds of its holdings being international securities. Also, the management fee is a relatively attractive 0.8% per annum, and the shares trade at a 9.9% discount to net asset value. Overall then, I believe Brunner, with its low management fee, international diversification and a near 50-year record of steady dividend increases, is an excellent investment for investors looking to protect their portfolio in the current environment.

Student income 

Another income investment I’m positive on the outlook for is Empiric Student Property (LSE: ESP). Strictly speaking, this is not a pureplay investment trust. It is a real estate investment trust which is virtually the same apart from its requirement that the majority of its income must be derived from property.

Unfortunately, of late the company has had to curtail its expansion plans after several years of rapid growth have resulted in a bloated cost structure. However, management is now taking actions to reduce costs, and according to a trading update published today, administration costs for the second half of 2017 were reduced by 21% from the first half. Meanwhile, bookings for its student accommodation properties are now at 40% for the 2018/19 academic year, which is “significantly ahead of last year.“

Management also noted in today’s trading update that the value of the group’s property portfolio was £890m at the end of December, up by 23.4% for the year. Based on the last reported net asset value, the shares are trading at only 0.95 of tangible book value.

City analysts are expecting the trust to announce a dividend of 5.55p per share for 2017 and 5p for 2018, giving a forward dividend yield of 6%, nearly double the market average.

All in all, Empiric offers a defensive income stream from property, trades at a discount to its net asset value and the trust’s dividend yield is a healthy 6%. This is why I believe that if you are looking for income, this company will make a great addition to your portfolio.