Diverse Income Trust benefits from flexible multi-cap investment strategy (LON:DIVI)

The Diverse Income Trust

Diverse Income Trust plc (LON:DIVI) has published its monthly factsheet for the period ended 31 March 2022. 

Fund managers, Gervais Williams and Martin Turner, commented:

In the context of the ongoing uncertainty for financial markets, it is worth highlighting just how much the present economic and stock market trends contrast with those of the last decade or two. The UK and US central banks are now raising interest rates progressively, to actively depress demand for borrowing by making it more expensive and bring demand for borrowing back into line with their ability to supply. Overlaying this, sanctions are being imposed on Russia in the knowledge they will inhibit the prospects for all other global economies. Over coming quarters, we expect trading conditions to become a lot more challenging for many companies. 

Prior to the current period, when financial stimulus and global growth were abundant, it was the share prices of higher-risk businesses with bold growth plans that outperformed. More recently, steadier businesses offering attractive streams of dividend income have started outperforming, these types of businesses are known as cash compounders. 

The multi-cap nature of the strategy allows the flexibility to select those stocks that are well positioned to generate cash on capital expenditure from across the UK stock market, including those on the London Stock Exchange’s Main Market which is the world’s most international market for the admission and trading of equity, debt and other securities, as well as the Alternative Investment Market (AIM) which is a sub-market of the London Stock Exchange (LSE) that is designed to help smaller companies access capital from the public market. If anything, we believe the advantages of holding these types of companies are more exciting than focusing on mainstream cash compounders only, because many serve immature markets, where expansion is less reliant on global growth. Furthermore, we believe their share prices are somewhat overlooked currently given that geopolitical events are dominating our attention. 

In our view, this is a vital moment for investors. We believe quoted companies with strong balance sheets are particularly fortunate because they can source additional capital from institutional shareholders even when economic and market trends are unsettled, and hence keep investing. Importantly, businesses with the potential to generate cash surpluses have advantages at a time when fewer businesses can fund capital expenditure. 

The Diverse Income Trust plc (LON:DIVI) provides shareholders with an attractive and growing level of dividends coupled with capital growth over the long term.

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