by Dave Baxter, Investors Chronicle, February 28, 2025:
Equity income investors have many ways to skin a cat. One debate of recent years, for instance, has focused on whether to hold shares that already pay out cash, or to instead invest in something in the hope of making healthy gains, then take an income by trimming your position..
It’s not just DIY investors weighing up such considerations. A good number of investment trusts have adopted ‘enhanced dividend’ policies that involve committing to pay out a percentage of their net asset value (NAV) as a dividend each year. Polar Capital Global Financials (PCFT) has just proposed a policy that would see it pay out 1 per cent of NAV every quarter, with dividends “paid from available revenue and topped up, if necessary, from distributable capital reserves”..
Trusts with an enhanced dividend policy should instead have the flexibility to buy companies and assets that may not pay out income but can generate big gains, adding some diversification and growth to your portfolio.
This is a pretty notable trait in the case of JGGI. The fund, which has tended to take a flexible and style-agnostic approach, nevertheless has a big bet on the US tech majors, which tend to offer little or nothing in terms of dividend yield but have made huge returns..
QuotedData’s James Carthew observes that JGGI contrasts sharply with Murray International (MYI), which tries to pay a higher, covered dividend. The JPMorgan fund has much greater alignment with the global equity market, and greater exposure to the US mega-cap stocks, which has led to much better returns but leaves it vulnerable to any pullback. “The mega-cap effect and US dominance has flattered JGGI for a long time,” Carthew says. “That could still change.”
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