Global dividend investment trusts can be a great way of generating income in retirement, but are all too often overlooked. These two could give your pension pot a real boost.
Desperately seeking Alpha
Investment trust Apax Global Alpha Ltd(LSE: APAX) is one of the highest yielding funds I have seen, currently paying 5.71% a year. Launched in June 2015, it invests in a portfolio of funds run by Apax Partners, with 51% in private equity and 49% in derived investments.
The £719m trust has just published its quarterly results to 30 September which show adjusted net asset value dipping slightly to EUR889.6m, against EUR894.4m at 30 June. This was primarily down to the half-yearly dividend of EUR22.4m paid out in the quarter. The dividend of 4.59 euro cents per share reduced the trust's adjusted net asset value (NAV) per share to EUR1.81, down slightly from EUR1.82 at the start of the period. So the income is generous, but the growth is suffering as a result.
Apax Global Alpha has a heavy 38% weighting to technology and telco, and is 57% invested in North America. Total return year-to-date to 30 September is 1.3%, and total return since IPO is 7%. Figures from Trustnet.com show the trust returning 8.2% in the last year, against 17.2% for the private equity postmark sector, so it is definitely lagging.
Those lavish dividends are partly at fault. It trades at a discount of 10.67%, which might suggest it is a bargain, or maybe that performance could be better. Income of nearly 6% is not to be scorned though.
I am more excited by Henderson International Income Trust plc(LSE: HINT), recently highly commended in the Money Observer investment trust awards 2017. Launched in 2011, this global trust could balance your UK equity income holdings quite nicely because it excludes this country to focus on three regions: North America, Europe, and the Far East, none of which can account for more than half of its investments.
Big names abound in its portfolio, with Microsoft, Novartis, Roche and Coca-Cola featuring in the top 10. It cannot invest more than 5% in any single company. The trust aims to be a core savings product and manager Ben Lofthouse's performance has been good, with Trustnet showing growth of 58% over the past three years, against 50% across the global equity income sector, and 85% over five years, slightly trailing its sector return of 90%.
This week's annual results to 31 August showed the trust achieving double-digit total returns, with NAV per ordinary share up 18.8% and the ordinary share price jumping 19.3%. This compares to a total return of 19.1% for the MSCI World (ex UK) Index. Management lifted the dividend 5.4% from 4.65p to 4.90p a share, giving a current yield of 3%.
Henderson International Income trades at a narrow discount of just 1.28%, with the board happy to see it reverting to trading at a premium and stating that it will implement share issues or buy-backs to keep it roughly in line with its peer group. The yield is a little below its sector average, but NAV total returns are well above. You could quite happily buy and hold this fund for the next 25 years.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.