"Many of these funds are trading on discounts to NAV, in spite of their high yields," Oriel Securities’ Iain Scouller said.
Performance of investment trusts over 1-yr
Source: Financial Express Analytics
Merchants, Dunedin Income Growth and Neil Woodford’s Edinburgh Investment Trust are each yielding more than four per cent, and have a focus on UK large caps.
They have each returned strong double-digit figures in the past year, and are trading at discounts to NAV of 4.7 per cent, 4.26 per cent and 2.6 per cent respectively.
Other high-yielding trusts include those with an overseas focus; European Assets has a 5.5 per cent yield.
"European Assets’ board resets the rate of dividend annually and the dividend is partly financed by effectively paying out capital as dividend," Scouller added.
Henderson Far East Income, meanwhile, has a yield of 4.3 per cent, with investments in Asian and Australian equities and preference shares.
"Many of these trusts have substantial dividend reserves which can be used to maintain or increase dividends at times when the dividend payable is not fully covered by annual revenues," said Scouller.
"We see the ability to use revenue reserves as an advantage that investment trusts have over some other investment products."
Property and infrastructure funds are also a good source of yield. Many property investment trusts yield between six per cent and eight per cent, while infrastructure trusts typically have yields of five per cent to six per cent, and are currently trading on premiums to NAV.
Investors should look wider than just at yields, however. Financial Express data shows Majedie Investments IT and Shires Income, which are yielding around 5.5 per cent and 6.3 per cent respectively, losing investors’ money over three and five years.