The Diverse Income Trust factsheet: pension saving flows into AIM to increase

Diverse Income Trust plc

Diverse Income Trust plc (LON:DIVI) has announced that its Factsheet for the month ended 31 October 2024 is now available:

Manager commentary

After such a long period of elevated interest rates, investors are now becoming concerned that governments will increase expenditure to offset an economic slowdown. In the UK for example, whilst the Budget did raise significant extra tax, the government is also planning to grow expenditure at an even faster rate. 

During October, the valuation of government debt fell back considerably. Alongside, stock market returns have moderated over the summer, with the UK stock market indices performance falling very slightly in October. The trust’s Net Asset Value (NAV) produced a positive return this month, in part as the share prices of smaller companies have started to outperform. To date, UK pension savings have been inheritance tax free. During October, the Budget proposed that pension savings will be liable to 40% inheritance tax in future. Companies listed on the Alternative Investment Markets (AIM listed stocks) have also been inheritance tax free, but in their case, they will be liable to a reduced rate of 20%. 

Currently, little additional pension savings are being invested in AIM listed stocks. With the Budget changes however, we believe pension investments in AIM listed stocks may now greatly increase. This is due to two reasons, one that we believe AIM stocks are overdue a period of better share price performance. Secondly, over the longer term, smaller companies typically outperform. Hence, in the coming years, we believe the pension saving flows into AIM stocks will increase due the lower inheritance tax liability. As the AIM investment universe is comparatively tiny in comparison to the major stock markets indices, such as the FTSE 100 Index, even modest increases in capital flows will, in our view, lead to AIM outperformance. We remain very upbeat about the prospects for the Trust. 

Gervais Williams & Martin Turner 31.10.2024

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.

Share on:
Find more news, interviews, share price & company profile here for:

Pan African Resources well-placed for future on extraordinary low PE ratio says fund manager (LON:PAF)

Discover how Pan African Resources plc (LON:PAF) has thrived, with insights from Gervais Williams on its success and growth potential in the gold sector.

UK Listed Investment Funds Investing Ideas

Discover diverse investment opportunities with UK-listed funds. From high-yielding REITs to international growth, explore insights for informed decisions.

Arbuthnot Banking has better opportunities and upside than NatWest Bank says Gervais Williams (LON:ARBB)

Arbuthnot Banking Group: Discover why this successful UK private and commercial bank is deemed underrated by financial expert Gervais Williams.

Norcros plc success story and low PE ratio positions business to “thrive” says Premier Miton

Norcros plc, the UK's leading bathroom brand designer and supplier, is poised for growth, noted Gervais Williams in an exclusive DirectorsTalk interview.

Newriver REIT plc: Analysis of transformational acquisition and positioning by Gervais Williams (LON:NRR)

Discover insights into Newriver REIT's transformative acquisitions as Gervais Williams highlights its strategic growth and robust market position in 2024.

Concurrent Technologies plc share price expected to continue outperformance says fund manager (LON:CNC)

Discover Gervais Williams' insights on Concurrent Technologies plc's (LON:CNC) strong growth trajectory amid rising defense expenses and new contracts.

Search

Search