Basket of Eight: 2019 review

[Luniversal]

The Basket of Eight (B8) was devised in 2010 for the ignorant and apathetic investor who needs to pay bills as they fall due. The portfolio tries for a flow of income from UK equity-based investment trusts. Its purchasing power should at least be constant over time. It should as far as feasible be 'fire and forget'.

B8 members were to be bought in equal amounts: City of London (CTY), Dunedin Income & Growth (DIG), Edinburgh (EDIN), Invesco Income Growth (IVI), Merchants Trust (MRCH), Murray Income (MUT), Schroder Income Growth (SCF) and Temple Bar (TMPL). Latest results are for financial years closing between Jul. 2018 and Jun. 2019.

Results are aggregated to a common Jun. year end, since this best fits accounting dates. Trends since the B8's backtested launch on Nov. 10, 2000 (also when pyad's 'HYP 1' began) are reviewed.


INCOME
The B8 lifted regular dividends per share by 3.6% in 2018-19 (2018: +6.4%), or by 0.7% (3.0%) after retail price inflation (RPI). This was half the average real rise of 1.4% pa during the basket's lifetime [1].

The portfolio's yield at Jun. 30, based on historic or officially forecast payouts, was 4.4% (2018: 4.1%). Such is a little cheaper than the average of 4.1% throughout its life; the B8 yielded 0.3 of a percentage point more than the FT All-Share Index at the year end, against 0.5 of a point 12 months earlier and 0.9 over its whole life. For all the talk of value/high yield shares being left behind in the past few years, their 'bond proxy' reputation for trustworthy income rendered them relatively less cheap.

The basket has not distributed uncovered income since the wake of the global financial crisis in 2011-12. Preparations for an income squeeze are evident. Trumpeting 'dividend hero' merits, trusts quietly shifted to bolstering asset backing while curbing distributions.

Cover for payouts in 2018-19 again averaged 1.05 times, above the B8's whole-life 1.03 times. The typical revenue reserve has been steady at 13 months of current payout: below its 16 months just before the global financial crisis, but adequate against short-term expectations that blue-chip dividends will not increase much soon.

Boards have pressed managers to renegotiate fees downward and scrap incentive payments. The basket's Ongoing Charges Ratio stayed at 0.57% of year-end net asset value (NAV), despite these assets shrinking by 8% in a weakening market. Revenue expenses, a lien on distributable income, reduced from 6.4% of the payout to 5.7%, the lowest in the basket's history. There has been some bounce from refinancing of costly structural debt contracted in the early 1980s. More will follow, e.g at MRCH.

Dividends per share since the putative launch are up 23% in real terms. Progress has been bumpy. Trusts imposed real cuts, year on year, on half of a possible 70 occasions in the past decade, averaging 2.2% nominal.

The income's purchasing power peaked in 2008-10 and has not been fully restored. Dividends shrunk by 0.8% pa after RPI over a decade. Their real value declined year on year four times since the crisis' worst fallout-- when it was down by one-eighth-- though never by more than 2% between years.

These features indicate the need for extra reserving in the owner's hands, if B8 income is not an optional and variable extra: see 'Derisking' below.


CAPITAL
Last year was bad for the basket's market value. After inflation NAV per share averaged a 5.3% shrinkage per constituent (2018: up 2.3%), though narrower discounts kept their share prices' attrition to 3.4% real (2018: up 2.2%).

Real changes between year ends since the putative launch have averaged a gain of 1.4% for assets per share, 1.2% for the share price. This was somewhat better than the closet Footsie tracker a clutch of UK Equity Income funds is often, wrongly, assumed to resemble. The B8 outperformed the All-Share Index by an average 0.6% pa on share price, and in nine of 17 years. Yet only one such index-beating year has occurred since 2013-14. Last year the basket trailed the All-Share by 2.0% following outperformance of 4.7% in 2017-18.

Nevertheless five of eight members beat the Index in latest accounting years, after only two the year before. The norm is for half the members to outdo the broad equity market.

The average discount of 5.7% at latest financial year ends is a point under the lifetime 6.7%, and has shrunk by 1.8 points since 2018-19. The tightest discount, 2.0%, was in 2012-13, when shattered nerves sought solace by holding big, safe, dull Footsie stocks. Issued capital expanded slowly but steadly: shares in issue are up by 19% since Jun. 2009, near the market bottom.


CONSTITUENTS
Briefly, individual trusts' contributions over ten years:

First, four income metrics: compound annual real dividend growth after inflation (1), number of real cuts year on year, average cover and average months in revenue reserve:

CTY: 1.1%, 2, 1.05x, 11
DIG: -1.1%, 4, 1.01x, 16
EDIN: 0.2%, 2, 1.04x, 17
IVI: -0.2%, 3, 1.02x, 11
MRCH: -1.5%, 9, 0.98x, 12
MUT: -1.1%, 7, 1.01x, 15
SCF: 0.4%, 4, 1.04x, 12

TMPL: 0.6%, 4, 1.10x, 10
--------------------------------------
B8: -0.6%, 7, 1.03x, 13

Capital metrics: share price change in decade to latest financial year end, number of years trailing the index, average yield and average discount/premium:

CTY: +118.8%, 3, 4.3%, -0.4%
DIG: +71.3%, 7, 4.8%, 8.1%
EDIN: +120.2%, 5, 4.2%, 5.7%
IVI: +113.9%, 5, 4.1%, 9.0%
MRCH: +67.0%, 5, 5.6%, 8.2%
MUT: +92.7%, 4, 4.4%, 4.8%
SCF: +75.0%, 3, 4.3%, 3.9%

TMPL: +90.7%, 4, 3.7%, 3.8%
-----------------------------------------
B8: +92.8%, 4, 4.3%, 5.0%

There has been no 'reversion to the mean' since the last review three years ago on The Motley Fool. The same trusts show the same diverse behaviour. Since accreted results are what matters, I need not discuss pros and cons in detail.

CTY is the only member to sell close to par. It offers a superior mix of soundly rising payments and capital preservation-- often noted by other commenters who compare it with a High Yield Portfolio. Has Merchants over-stressed earnings to the detriment of asset backing? Yes, but a 'juicy' near-6% yield balances the subnormal one at Temple Bar: the most contrarian and 'conviction' trust, albeit with high cover and the second fastest income growth rate after CTY.

Edinburgh is tainted by the debacle of Neil Woodford via his former lieutenant Mark Barnett, who imitated his mentor and made bad picks of his own; however EDIN's price, yielding 4.7%, has recovered while the divi looks safe. Dunedin and Murray Income have not shone either on payouts or share price [2]. Schroder Income coped better, meriting its tight discount, while Invesco Income Growth trundled along unremarkably.


PERFORMANCE 2000-19
Let us see how the B8 would have performed in practice. An investor places the same £75,000 lump sum as HYP1, with the same equal weighting and 1% acquisition costs and on the same date: Nov. 10, 2000.

The basket would have collared £5,063 of income last year, a 3.6% increase. (HYP1 got £8,882 in the year to Nov. 2018, but read on.) The B8's yield on Jul. 1, 2018's opening capital was 4.3%, against the historic average of 3.8%. This is competitive with cash or fixed interest, if the basket be viewed as a savings account... with some inflation protection for interest and less of it for principal. After 18.5 years the basket's £75,000 investment would have dispensed £69,380 of regular dividends.

Market value fell last year by 4.9% to £117,638, compounding at 2.4% pa from £75,000 in Nov. 2000. This is less than the cost of living, c. 3%, so real capital eroded. The basket depreciated during seven of 18 composite years, but fared modestly better than the All-Share Index, mostly by withstanding market declines better. Average annual outperformance has been 1.4 percentage points, 11 times out of 18. But half the shortfalls, as mentioned, are recent.

How frisky is the B8, for better or worse? In 225 months since launch, it has risen 132 times at an average +2.9%, and fallen 93 times averaging -3.5%. Respective figures for the All-Share are 127 times on the up, averaging 2.8%; 98 going down by 3.2%. The B7 had 135 rising months at +3.1%; 90 falling at -3.4%.

FE Trustnet's risk score-- a measure of volatility over the past three years loaded towards the present-- has the basket at 98 where the FTSE 100 index is 100 and cash 0. The most erratic members have been the outliers at either end, MRCH and TMPL; the least, good old CTY.

Capital value is academic to a never-seller such as your correspondent. Still, for it to keep pace with dividend raises over a long span implies that the income stream is not being bought at the principal's expense. Faith in the stream for now probably rests more on its security than its exuberance. Such is the drawback of opting for 'juiciness' rather than the 'growthiness' of the Basket of Seven-- which customarily yields ~1 per cent less in the beginning, but with much speedier income growth.

In 2000-19 the B7 produced £75,909 against the B8's £69,380. Thus the Seven covered their initial investment sooner, and as time passes the gap should keep widening. So should the difference in capital values [3}. The Eight are more suited to those who want immediate gratification or have short life expectancy. The B7 is for the wide blue yonder, e.g. for 20-30 years of retiral.


DERISKING
Added safety comes from 'derisking' the income. One mimics an index-linked bond and an income reserve backs it up.

The £75,000 basket here illustrated could have been derisked to give a 3.25% yield in its first eight months' operation as spendable income, against a historic All-Share yield of 2.2% at inception. That would have absorbed all receipts in the first 'stub' period (eight months to Jun. 2001); but in the B8's infancy income rose so briskly that the reserve would already have been 15 months by Jun. 2004. Thereupon an increase of one-quarter in the withdrawal rate to 4.1% would have been affordable.

Only three years later, in 2007, the reserve would have reached two years, twice what most trusts reckon prudent. The withdrawal rate could be lifted to 5.6%. There woul have been no room for further boosts against a floor reserve of 12 months; but it has stayed reassuringly in the 13-15 month zone, now at its top end. That should insulate it against another 2009-type cold snap.

The B8's inflation-protected 5.6% for most of the its existence compares with a similarly derisked 5.5% from HYP1. The latter shelled out a far larger gross income, tempered by the need to iron out its ups and downs by setting more aside. (Only fair to add that by Nov. 2008 HYP1 had a bigger reserve, 19 months.)

Derisking would have required 9% of the basket's receipts to be held back, over and above the ~3% which trusts retained. It is a hypercautious strategy for those who cannot let income's buying power wobble. If a basket or High Yield Portfolio is a top-up to pensions-- more for indulgence than essentials, as I originally conceived it-- one might prefer to hold equities directly and tolerate more ups and downs.

All B8 members pay out quarterly: dosh arrives little and often, about every 12 days. A cost-effective lump sum would be £10,000 or more gross. With stamp duty of 0.5% and commission of, say, £150 a share, ten grand gets a starting income of £439 at Sep. 24's closing prices, averaging £13.72 a time. Receipts are free of income tax to the basic-rate payer, or to all within an ISA or using the £2,000 dividend allowance.

Since the launch the only book-keeping would be to ensure that dividends appeared on time. I have found brokers efficient at remitting them.
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[1] Dividends' compound annual growth rate is measured from Apr. 2001, to ignore arbitrarily different payment dates and numbers during the first eight months.

[2] DIG has been shifting from 'juicy' to 'growthy', which may excuse it partially. See today's interim report.

[3] Then again, total return since Jan. 2006 has been £124,548 against the B7's £121,288. The juicier basket has been sturdier while value shares were in eclipse.

[DavidM13]

[i]The Basket of Eight (B8) was devised in 2010 for the ignorant and apathetic investor who needs to pay bills as they fall due.

That bit sounds like a job for the AIC Income Finder!

[Itsallaguess]

the AIC Income Finder is different to the Income Builder?

Accessible for free but only by registering an account online with AIC and uploading your data, you can't just download it and play with it in absolute private?

In which case building something similar on a home spreadhsheet does just as well?

Hi Mark,

It's not clear just what AIC data you'd like to have a play with, but as I note that you're a recent new member of this forum then you may not be aware that I do a semi-regular yield-scrape for the AIC Investment Trust information, and post the tabular data onto the High Yield Shares & Strategies - General board.

Here's a link to the August 2019 drop I created -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=19097

I've mentioned this not really for the tabular data in itself, which may well be out of date now, but rather to let you know that underneath the AIC data in the above linked post, you'll find some instructions on how the data can be generated at any time to capture the latest AIC figures, so if having a play with this sort of Investment Trust yield-data is something that you're interested in doing off-line, then hopefully the above linked post might be useful to you.

Cheers,

Itsallaguess

[DavidM13]

At some stage my Income SIPP will be required to produce a fairly regular fairly reliable dividend stream, not perhaps to the extent that I need a regimenting but nevertheless ... the AIC Income Finder is different to the Income Builder? Accessible for free but only by registering an account online with AIC and uploading your data, you can't just download it and play with it in absolute private? In which case building something similar on a home spreadhsheet does just as well?

The Income Finder is the name of the section. This houses the Income Builder (charting and export on dividend payments), the dividend diary (historic and upcoming payment dates) and various guides and articles.

It required a registration so it could remember ones settings. You could use it as a one off to pull down dates, values etc. into a spreadsheet then delete and maintain it privately of course. That may help efficiency a bit.

[Itsallaguess]

I think AIC Income Finder is a specific tool for your specific portfolio to diarise when and how much income your holdings produce through a year so, for example, you can compare to the timings of various household bills.

Most income IT baskets have quarterly income streams, some are monthly some are less frequent, and you may want to smooth things out or indeed have a concentration of yield once or twice a year.

For that to work you would have to load your real data into a spreadsheet. You could upload to the AIC website, or do something less sophisticated at home?

Hi Mark,

Without wishing to take this thread any further off it's originally intended topic, the particular subject of dividend-payment timings has been discussed many times over the years, both here and back when the Motley Fool forum was going, and my personal view is that there are much more important factors to take into account when we're investing for income, over and above the specific payment dates and periods of the payments themselves.

In addition to this, and given that many income-investors might probably only ever wish to consume a portion of any given payouts over a calendar year, rather than a constant 100% income-usage, one of the main points around these discussions usually comes down to perhaps setting up a completely separate 'holding-account' into which all the diverse dividends are paid over the year, and then simply setting up a monthly 'standing order' from that account into your main bank-account, to act as an income-investment 'wage', with some dividends held back in the 'holding-account' to cope with the expected overall 'float', and to even cope with what might be 'unexpected events' too...

That, to me at least, feels like a much simpler plan to deal with the variations in dividend payment dates, and it leaves me to concentrate on what I consider to be much more important individual 'robustness-factors' in the income-investments themselves, rather than be led by some spurious payment dates that, let's remember, can and often are changed by the companies themselves anyway.

This approach also enables us to better control the single 'paid wage' element of the process, which might hopefully steadily rise over the years, and it can do so using this method in a very simply-controlled manner, with all the various up/down permutations going on behind the scenes in the holding-account....

Cheers,

Itsallaguess

[everhopeful]

I have rather lost the thread in this thread. David's suggestion of using the AIC tools was in response to Luniversal's designation of the Basket of Eight as a bill paying portfolio for the apathetic and ignorant. The Income tools on the AIC site are entirely suited to this type of exercise and can be as simple or advanced as one wants. I do not need to use my IT portfolio to pay the bills but I find the information on timing of dividends and expected amounts to be very useful not least to check that my platform has received due payments.

[DavidM13]

You did miss RDI REIT off your list?

He didn't so much miss RDI Reit it is not part of the AIC universe so will not appear on the website. There are two types of REIT. "Equity REITs" and "Fund REITS" Morningstar class this as the former so it is not part of the fund universe. More of a normal trading company with REIT status, a bit like Big Yellow Group I imagine.

[monabri]

History of B7, B8 etc by JohnTheJute
viewtopic.php?p=120011#p120011


Link to Luni's last B7 review
viewtopic.php?p=225773#p225773

[mattman74]

Thank you for doing this Luni.

Once upon a time I started building a B8 type portfolio but came to the conclusion that it would just involve too many ITs fishing in the same pond as my (now slowly reducing) HYP. In the interests of diversification I stuck with CTY as my UK income IT. Not a daft decision.

I have bought over the years:
high income bond ITs (CMHY, HDIV, NCYF), REITS (BLND, NRR, BCPT, BBOX), international income (EAT, JEMI, JETI, MYI), asset backed (SQN, infrastructure (3IN, HICL) and renewables (TRIG, BSIF and UKW). All these ITs fish in slightly different ponds but give a decent and usually rising income.

Matt

[Luniversal]

May I ask some questions please ...

By B7 do you mean B8 excluding ... TMPL? Because it is too juicy or sub par yield?

--The Basket of Seven is a separate portfolio. One maximises starting income but with less growth; the other, vice versa.

Inevitably over nine years overlaps and misfits between the two selections have emerged, but the principle is the same: a worry-fee, rising income stream which should cope with inflation given extra reserving.

This is assuming income is fully drawn in both cases or in either case of B8 or HYP1 is any reinvested?

--Fully drawn except for the basket's income reserve. With HYP1 it is belt but no braces. You do all the deciding about how much to hold back.

If you had a B1 and it was just CTY how would it compare against B8 or B7 in terms of income delivered and capital accumulation?

--City of London would have produced £71,859 of income to Jun. 30 from £75,000 gross invested in Nov. 2000. Comparable income from the B7 is £75,909, from the B8 £69,380. But the B8 and CTY raked more of it in sooner.

CTY's capital value would have been £134,888 by Friday's close, compared with £117,955 for the full B8, £187,359 for the B7 and £140,932 for the 'universe of 24' income trusts from wbich basket components were drawn.

How does the risk / volatility compare with HYP1? In theory B8 should be sub 100 but HYP1 might be 100 plus depending on the stocks?

--HYP1 has beaten the FTSE 100 Index in 13 of 18 years to its anniversary in 2018, as reported by pyad. Comparable outcomes were 14/18 for the B7, 13/18 for the B8. On average outperformance was 5.6% pa for HYP1, 6.2% for the B7 and 3.1% pa for the B8.

Lacking more frequent stats, no measure of volatility is available for HYP1. It would be strange if its risk score were lower than the FTSE 100's or B8's, given its concentration in c. 15 shares.

By derisk do you mean trading away some of the capital gain or not reinvesting proceeds or selling down at times to stock back up later ... is that in the rules?

--Baskets are for dividend-seekers. Capital gain is irrelevant, except as a guide to the sustainability of income, because you never sell. The original selection is never altered unless a trust merges or is dissolved. That has not happened yet for any of the 24 income ITs I have monitored in this century.

Is RPI the right measure of inflation, does it matter?

--More in line with spending patterns for retirees who require fuss-free income. CPI was a government fiddle to play down inflation.

This is all based on a lump sum investment in order to contrast with HYP1. It would probably be too complex to run the slide rule over a scheme where you are progressively investing and balancing but that is real life ...progressively contributing to SIPP and ISA. Would that matter much to the outcome do you think? (Even after retirement you can continue to drip into SIPP for the tax relief)

--Baskets are for investors who have finished saving and want to start living. I believe in horses for courses. To accumulate the pot, go for growth ITs (such as the 'Growth Ten', which I may report on later) or for maverick funds such as my 'Conviction Five'.

HTH

[BrummieDave]

I believe in horses for courses. To accumulate the pot, go for growth ITs (such as the 'Growth Ten', which I may report on later) or for maverick funds such as my 'Conviction Five'.

Just back from a period offline whilst on holiday and pleased to see your update of the Basket of Eight. As a Basket of Seven (with tweaks) investor, I look forward to that update more of course.

And I didn't even know there was a 'Growth Ten' and a 'Conviction Five'!

[monabri]

And I didn't even know there was a 'Growth Ten' and a 'Conviction Five'!

Follow the link for more info on "C5" and "G10"

viewtopic.php?p=120011#p120011

[monabri]

So, from the post on B7 - viewtopic.php?p=225773#p225773

B7
After 18.5 years the basket's £75,000 investment would have dispensed £73,262 of regular dividends, plus £794 of one-offs. Market value fell last year by 2.9% to £184,222. The basket would have collared £6,575 of income last year


Whereas for

B8
After 18.5 years the basket's £75,000 investment would have dispensed £69,380 of regular dividends . Market value fell last year by 4.9% to £117,638. The basket would have collared £5,063 of income last year.

So, roughly £67k difference in capital value (or 13 times the B8 income from last year).


I think B7 is the winner after 18.5 years of retirement!

[Dod101]

Like many I am sure, I have missed Luni's contributions and so when we get them they are all the more valuable. This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs. OTOH, I seem to be set for a good year income wise but we'll see soon enough.

Anyway, thanks Luniversal

Dod

[staffordian]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

[seagles]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

Which is why my IT basket has moved away from UK equities. Have added MCT for North American exposure and JETI for Europe. Before I only had HFEL outside of UK. Have reduced my HYP holdings, mainly by moving my SIPP towards pure IT holdings. Just 2 left in there now with 7 ITs.

[richfool]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

Which is why my IT basket has moved away from UK equities. Have added MCT for North American exposure and JETI for Europe. Before I only had HFEL outside of UK. Have reduced my HYP holdings, mainly by moving my SIPP towards pure IT holdings. Just 2 left in there now with 7 ITs.

Yes, I would concur with the above posts.

I have held IT's as far back as I can remember and was only tempted to venture into HYP stocks when I joined TMF and their short-lived Divided Edge service. Since then I have become increasingly conscious that because HYP's target stocks paying above average dividends that they are thus targetting higher risk stocks. And as HYP's consist of single company stocks, they also require a higher level of attention. So I have gradually reverted back to concentrating on IT's, each of which is significantly diversified. Currently I only hold 6 HYP stocks.

I too have broadened the focus of my IT portfolio particularly globally, and also into other sector like renewable energy, infrastructure, REIT's, & utilities. Ironically I've just added JETI after a period of lower European exposure. I too hold a good sized slug of MCT. After doing some tinkering with my UK G&I trusts, I am now holding those in the hope that once Brexit is resolved that they will produce a good recovery.

[Dod101]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

At the risk of repeating what others have said, there is simply no point in buying more than one UK income IT. City of London or Edinburgh are the two most obvious ones. There are a number of ITs investing overseas which are producing the required income and of course they also have the ability these days to use realised capital gains to fund their dividend. Quite a few have been mentioned on this thread already.

Dod

[toofast2live]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

At the risk of repeating what others have said, there is simply no point in buying more than one UK income IT. City of London or Edinburgh are the two most obvious ones. There are a number of ITs investing overseas which are producing the required income and of course they also have the ability these days to use realised capital gains to fund their dividend. Quite a few have been mentioned on this thread already.

Dod

Well there’s a substantial difference in performance between those two. But point taken. Choose 1 uk Income Trust then diversify by company size and international income trusts.

[richfool]

... This thread seems to me to be particularly so because the traditional HYP shares are so bombed out and even the tobaccos seem to have an uncertain future. No wonder we are turning to ITs.

Dod

Whilst I am one of those who have ditched an HYP for an IT basket, am I the only one who wonders whether ITs will be able to maintain their legendary income growth when many of their constituents are the same as most HYPs?

At the risk of repeating what others have said, there is simply no point in buying more than one UK income IT. City of London or Edinburgh are the two most obvious ones. There are a number of ITs investing overseas which are producing the required income and of course they also have the ability these days to use realised capital gains to fund their dividend. Quite a few have been mentioned on this thread already.

Dod

I have to say I don't necessarily agree on limiting the UK income IT's to just one or two, as long as one has good reasons for holding the additional trusts. For example, In addition to CTY, I hold FGT for its conviction holdings, Shires for its exposure to smaller coys and fixed interest, Mercantile for its mid cap exposure and MUT because it has had a better capital return record than many, including CTY. Noted it could be argued that some of those are less focussed on "income" (e.g. FGT & MRC).

There could also be an argument for holding several trusts by those wanting a regular income stream to spread out the dividend payment dates.