This is despite the current thirst for income among investors and the ability of trusts to increase their dividends year-on-year.
Hargreaves Lansdown’s Richard Troue said: "One of the key advantages of investment trusts is that they can hold back up to 15 per cent of income and build up a revenue reserve."
"That is used to pay out dividends and smooth flows in years when growth might be hard to come by."
Troue says investors looking to capitalise on the combined effects of dividends and total returns should consider buying equity income trusts as long as they have an investment horizon of at least five years.
"The timeframe should be as long as possible. Anyone looking at the funds I’ve mentioned should have an absolute minimum of five years, ideally 10," he added.
Troue recommends a trust each for the cautious, balanced and aggressive investor.
Cautious – City of London IT
For investors who want to take advantage of equity returns without taking on excessive amounts of risk, Troue recommends Henderson’s five crown-rated City of London IT.
"The City of London trust has one of the best records of consistent dividend growth out there and it’s still got some in reserve as well," he said. Troue describes manager Job Curtis (pictured), who has been running the trust since January 1991, as a "sensible, level-headed manager" and says his focus on larger, blue chip international companies adds stability to the trust.
He adds that because Curtis holds more than 40 per cent of the portfolio in his top-10, it is an extremely high-conviction strategy.
"He’s backing his best ideas with quite a lot of conviction," he said.
The £757m trust has outperformed its benchmark – the IT UK Growth & Income sector – over three, five and 10 years. It has marginally underperformed the sector over the short term.
Over the last decade, the trust has gained 204.24 per cent, while the sector has made 181.07 per cent, according to FE Analytics.
Performance of trust vs sector over 10yrs
Source: FE Analytics
It has an attractive yield of 4 per cent.
As Troue highlighted, the trust is primarily composed of blue chip UK names such as British American Tobacco, Royal Dutch Shell and GlaxoSmithKline.
Its highest weighting is to financials, at 20.3 per cent, followed by consumer products and services.
Unlike the other two trusts on this list, the City of London IT is entirely UK-focused, which means it does not have as wide a range of companies to choose from.
However, Troue says it still has plenty of opportunities to access global growth through UK-domiciled companies that garner their gains from outside the country.
The trust is trading on a premium of 3.1 per cent and is geared at 8 per cent, according to the AIC.
City of London IT is also comparatively inexpensive, with ongoing charges of just 0.45 per cent.
Balanced – Alliance Trust
Troue says Alliance Trust represents a more balanced option for investors. It has recently reshuffled its management team and is now leaning more heavily towards core global holdings.
While the restructure only happened very recently, he says the trust is off to a good start.
"It has got quite a balanced approach between long-term growth themes and those companies paying a healthy dividend," he explained.
While the trust has underperformed its benchmark – a combination of the FTSE All Share and FTSE World indices – over the past decade, it has beaten it over one, three and five years.
Over three years, the trust has made 48.64 per cent, while the index has picked up 37.79 per cent.
Performance of trust vs index over 3yrs
Source: FE Analytics
It has a dividend yield of 2.1 per cent.
It has access to larger companies around the world. US pharmaceutical giant Pfizer and emerging markets behemoth Samsung Electronics feature in the fund’s top-10 holdings, alongside major UK companies such as Royal Dutch Shell.
The trust’s highest weighting is to North America, with 44.2 per cent of AUM allocated to the region. The UK is the next highest regional bet, at 22.9 per cent.
The trust is trading on a wide discount of 11.2 per cent and is 10 per cent geared.
It has ongoing charges of 0.76 per cent.
Aggressive – Scottish Mortgage IT
Troue says Baillie Gifford’s Scottish Mortgage IT has a strong track record of dividend growth and would suit an investor with a long-term investment horizon.
"The trust is not going for high yield. It is looking for companies that are growing strongly over the long term," he explained.
He adds that the trust is looking to capitalise on industries such as technology that will only get bigger in the future.
The trust is more volatile than the other two on this list, but it has strongly outperformed the FTSE World index over three and 10 years.
It took a heavy hit in 2008, losing 44.77 per cent, which is one of the main reasons why its five-year numbers trail those of the index.
The trust performs strongly in rising markets, surging ahead in 2009 and 2010, but suffered a 15 per cent loss in the falling markets of 2011.
Over 10 years, the trust has made 283.87 per cent, while the index gained 148.51 per cent, according to FE Analytics.
Performance of trust vs index over 10yrs
Source: FE Analytics
The trust is trading on a discount of 3.9 per cent with 16 per cent gearing. It has a lower yield of 1.7 per cent, but has grown its five-year dividend by 2.6 per cent.
It has a more varied composition than the other two trusts, with a mix of equities from North America, Europe, the UK and the Pacific Basin.
Its top holding is internet giant Amazon. It also holds Chinese web services company Baidu and Google in its top bets.
It has ongoing charges of 0.51 per cent.