Looking across the investment trust universe, the firm said: “investment trusts with higher dividend yields (4% or more) saw their discounts narrow the most in the post-financial crisis market environment.
Furthermore, in the past two years, these trusts have generally tended to trade at/above their net asset values.”
One of the clearest demonstrations of investors’ insatiable appetite for income in the face of declining fixed income yields, on display, Cantor Fitzgerald demonstrate that those trusts yielding above 6% in the past five years have seen their rating move from an average discount of 23%, to a 3% premium.
Investment trusts with a dividend yield between 4 and 6%, over the same period saw their discount improve from around 10% to around par.
“It is interesting to note that, within this group, the 3% – 4% bracket remained at a consistent relative premium to its lower yielding peers,” Cantor Fitzgerald said, adding: “Furthermore, while the higher yielders continued to experience discount narrowing from 2013 to the present, the lower yielders saw their progress stall (and actually reverse over the past year).”
Unsurprisingly given the success of top dividend payers, increasingly, so-called ‘high-yielders’ have also come to dominate the new issuance space as well.
As Cantor Fitzgerald points out: trusts with dividend yields of 4% have accounted for half of the 80 new issues that have come to market since the trough of the Global Financial Crisis “despite this segment of the investment universe only making up one in every six trusts before that point.”
