The Diverse Income Trust

Could be the time for UK equities to shine

14 October 2024

The Diverse Income Trust (DIVI) is a member of the 18-strong AIC UK Equity Income sector. It has a differentiated multi-cap income strategy and therefore its performance can differ meaningfully from those of its peers. Managers Gervais Williams and Martin Turner at Premier Miton Investors are very bullish on the outlook for UK stocks, which they believe can outperform overseas mainstream equity indices due to very attractive valuations and income prospects. They note that with global profit margins at all-time highs and increased geopolitical tensions, there could be a change in investor behaviour, with increased demand for income rather than capital growth strategies, which have dominated the investment landscape for the last few decades. MORE »

Manager anticipates a small-cap super cycle

14 February 2024

The Diverse Income Trust’s (DIVI’s) managers Gervais Williams and Martin Turner focus on generating a dividend income stream that is more resilient and has the potential to grow faster than those of the trust’s peers. They believe that over time this strategy should lead to superior capital appreciation as well as income growth. Since launch in 2011, DIVI’s dividend has compounded at an average annual rate of around 6%. UK stocks have been out of favour with global investors, who now make up around two-thirds of the UK shareholder base compared with 17% in 1994. As a result, the UK market looks very attractively valued in both absolute and relative terms, so there may be considerable upside potential from an improvement in sentiment towards UK stocks. MORE »

Accelerating into 2021 recovery

16 March 2021

The Diverse Income Trust (DIVI) continues to top the ranks of UK high dividend yield peers over the past 12 months by NAV total return (TR) and remains in the top quartile by NAV TR over the medium term. This multi-cap trust is little correlated with UK equity indices but reflects the UK market’s performance trend. Williams and Turner are cautiously optimistic about the global recovery from the pandemic. Given the lag of the UK market since the 2016 Brexit vote relative to global equities, the managers expect the UK to outperform global shares within the short- to medium-term horizon. The managers also believe that income shares or what they call ‘short-duration’ shares will outperform growth equities. MORE »

Multi-cap approach pays off yet again

13 November 2020

Gervais Williams’ and Martin Turner’s multi-cap approach to managing The Diverse Income Trust (DIVI) has yet again paid off, protecting on the downside. The trust has topped the ranks of UK high dividend yield peers over the past 12 months, and remains in the top quartile by NAV total return over the medium term. It has also materially outperformed the comparative indices since launch in 2011, demonstrating the managers’ skill to pick winners, patience, consistent approach, and the ability to diversify away most of the risk of dividend cuts. Williams believes that DIVI’s small- and mid-cap tilted portfolio is well positioned to continue benefiting from increased investor demand for cash-generative businesses, caused by fears over the current coronavirus pandemic and lockdowns. MORE »

Well-placed to capitalise on weak sentiment

21 May 2020

The Diverse Income Trust (DIVI) aims to provide shareholders with an attractive income, as well as capital growth, over the long term through a bottom-up approach to investing in UK equities across the market capitalisation spectrum. This gives the manager a wider opportunity set from which to pick stocks and dial down portfolio risk. DIVI has also profited from put options that boosted cash levels when the market was extremely weak. Although DIVI’s income may decline in the short term, as many UK companies have recently cut their dividends, the board has recently maintained the third interim dividend, which suggests it expects this to be a transitory feature for the trust. MORE »

Weak sentiment presents exciting opportunities

18 October 2019

The Diverse Income Trust (DIVI) aims to provide shareholders with an attractive and growing level of income, as well as capital growth, over the long term. Unconstrained by index considerations, the managers (Gervais Williams and Martin Turner) have a wide investment universe from which to select companies that are well managed and able to deliver sustainable and growing dividends. The portfolio is well diversified, with a bias towards small-cap companies; since DIVI’s inception in April 2011 to end-September 2019, the trust has delivered an annualised NAV total return of 11.5% and consistent growth of its regular dividend. MORE »

Unloved small-caps offer long-term opportunities

15 April 2019

The Diverse Income Trust (DIVI) aims to generate a good and growing level of income, as well as capital gains over the long term. It is not constrained by benchmarks and has a wide opportunity set across the market capitalisation spectrum to find high-quality, resilient companies that can sustain dividend growth over the long term. The managers, Gervais Williams and Martin Turner, have a small-cap bias and over two-thirds of the portfolio is outside of the FTSE 350 index. Since its inception in April 2011, the trust has delivered an annualised NAV total return of 12% and consistent growth in its regular dividend. Performance in more recent years has lagged the FTSE All-Share index, which the managers believe reflects small-cap and value stocks being overlooked, and they are finding superior investment opportunities in this segment of the UK equity market. MORE »

UK equities present interesting opportunities

29 October 2018

The Diverse Income Trust (DIVI) aims to generate a good and increasing level of income, as well as capital gains over the long term. It primarily invests in UK equities, across the market capitalisation spectrum, seeking companies that are underappreciated by the market and able to generate productivity gains, which in turn underpin future dividends growth. The trust has around two-thirds of its holdings in companies outside of the FTSE 350 index, and is relatively lowly correlated with mainstream UK indices. DIVI has a solid medium- and long-term performance track record with a total return of c 14% pa when both the NAV and dividend income are included, over the period since inception in April 2011 to end-September 2018. UK equities remain out of favour ahead of Brexit and volatility has increased. This combination is presenting greater opportunity to add value, according to the managers Gervais Williams and Martin Turner. MORE »

Small caps best insulated from macro headwinds

15 February 2017

The Diverse Income Trust (DIVI) invests in UK stocks from across the market cap spectrum that have strong prospects for sustainable dividend growth. This all-cap income generating strategy was developed by Gervais Williams and Martin Turner of Miton Asset Management. The c 145 stock portfolio provides a broad spread of investments and has a strong bias towards dividend-growing smaller companies. In terms of NAV total return, the trust has generated +125% over five years, ranking it second in its 23-strong peer group (the Association of Investment Companies’ UK Equity Income sector). Since launch, DIVI’s annual dividend has grown from 2.0p in FY12 to 2.8p in FY16 and it has built a substantial revenue reserve. MORE »

Positioned to navigate more difficult conditions

11 February 2016

The Diverse Income Trust (DIVI) is a UK equity income fund that is differentiated by investing across the market capitalisation spectrum. At 31 December 2015 around one-third was invested in the largest 350 UK stocks with the balance in smaller quoted stocks. Since launch in 2011 it has grown substantially, and has outperformed both the broad UK market and the high-yielding large- and mid-cap sector in total return terms in three of the last four years. It has also outperformed the majority of its sector since launch. A further element of differentiation comes through a FTSE 100 put option. This runs through to March 2017 with a strike level of 6,000, and also provides an element of downside protection covering around one-third of the portfolio. MORE »

Multi-cap income with small-cap growth prospects

26 May 2015

The Diverse Income Trust (DIVI) differs from other UK Equity Income Trusts though its policy of investing in a wider universe of UK quoted stocks. Managers Gervais Williams and Martin Turner focus on those companies with the greatest potential dividend growth, since they believe that this will ultimately lead to the best returns. Currently this policy has led to only 35% or so of the portfolio being invested in the conventional large/mid-cap universe. In contrast many smaller stocks are growing their dividends rapidly, and the managers believe markets are now entering another period of smaller company outperformance. The DIVI strategy has delivered strong performance since launch in 2011. MORE »