Diverse Income Trust plc (LON:DIVI) managers, Gervais Williams and Martin Turner at Premier Miton Investors, are currently remarkably upbeat.
Usually, when market leadership becomes too concentrated, like now in US large-cap technology stocks, investor preferences shift towards another group of companies. The managers believe that equity income stocks are set to become the new market favourites as, in a nationalistic world when asset prices are volatile, a steady stream of cash paid directly into investors’ bank accounts becomes a major advantage. They expect this trend to particularly favour the UK stock market as it has a large cohort of equity income stocks and has been devalued by persistent outflows since Brexit.
Williams and Turner consider that many UK small-cap equity income stocks have fallen to ‘absurdly low valuations’; hence, they are the most bullish that they have been for 30 years. The managers anticipate a UK market super cycle, especially within small-cap stocks, which would likely become a very favourable long-term tailwind to DIVI’s performance, in addition to the value generated by the trust’s income strategy.
Diverse Income Trust plc invests primarily in quoted or traded UK companies with a wide range of market capitalisations, but a long-term bias toward small and medium sized companies.
