Highest-yielding investment trusts
| Investment trust |
Discount/premium (%) |
Yield (%) |
| AXA Property Trust |
-38.8 |
9.7 |
| IRP Property Investments |
-10.5 |
10.3 |
| British & American |
15.3 |
10.8 |
| Picton Property Income |
-38.3 |
10.8 |
| Invista Foundation Property |
-30.0 |
10.8 |
Source: Winterflood Securities
Not taking into account niche investment trusts and split-caps, closed-ended property groups dominate the high-yielding vehicles. Four of the five highest-yielding investment trusts have a focus within this sector.
Performance of trusts over 3-yrs
Source: FE Analytics
Investors need to look beyond these high yields, however. Returns from the above closed-ended companies have been mixed; while AXA Property Trust, Invista Foundation Property Trust and Picton Property Income all gave strong triple-digit returns over a three-year period, they have all lost money in the past 12 months. A similar underperformance can be seen over five years.
"Invista and Picton are at big discounts, but largely because they are due for refinancing soon," James Brown of Winterflood Securities said. "Investors need to be aware that Invista’s dividend isn’t covered."
Invista is trading at a discount to net asset value (NAV) of 30 per cent, compared with its average discount of 24 per cent over one year, while Picton is trading at a 38.3 per cent discount, compared with an average of 21.1 per cent over the same period.
AXA Property Trust and IRP Property Investments are also both at wider discounts than average over the past 12 months, trading at 38.8 per cent compared with 30.8 per cent and 10.5 per cent compared with 3.6 per cent respectively.
"Higher yields don’t necessarily mean an investment trust is a better performer," Cannacord Adams’ Paul Locke explained.
"I’d be more likely to go for something like F&C’s FCPT, which has a lower yield but a better performance."
Performance of trust vs sector over 1-yr
Source: FE Analytics
Our data shows the £701m fund, which is managed by Richard Kirby, returning 4.4 per cent over the past year, while its IT Property Direct UK sector lost 17.7 per cent.