Diverse Income Trust plc (LON: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.
The Diverse Income Trust multi-cap strategy and the portfolio’s diversification (c 130 holdings) mean the trust’s portfolio stance has not needed significant change during the pandemic. The trust is well positioned for either the UK recovery or for continuing to deliver attractive returns on the current high-beta dominated markets. The cyclical value sectors within the portfolio, including financials (29.1% at end-January 2021), materials (15.4%) and energy (107%), are set to give an additional performance boost during an economic upturn. Given that small-, mid-caps and AIM-quoted stocks, combined, comprise over 63% of DIVI’s portfolio, DIVI is likely to outperform the all-cap index and many larger-cap tilted peers in the recovery scenario.