Two investment trusts managed by Invesco Perpetual's Mark Barnett have topped the tables of Kepler Partners' new ratings system, which is designed to identify investment trusts that generate a real and dependable income without sacrificing capital.
Barnett's trusts are joined by the £205m Schroder Income Growth trust, managed by Sue Noffke, which also features in Kepler's Bulletproof Income Portfolio.
The firm said: "It carries our maximum rating due to the fact it has scored well across the board, but in particular it has been among the best in the sector for its underlying portfolio income and its current revenue reserve cover, with revenue reserves currently equating to 116% of last year's total dividend (the fifth highest in the whole sector)."
Fourth in line is the £42m Chelverton Small Companies Dividend trust, managed by David Horner and David Taylor.
Kepler said the trust's smaller size means it is off the radar of most discretionary fund managers, suggesting it could be a trust to keep an eye on.
It added: "It is 5-Orb rated due to the sheer amount of income it has generated over five years (almost double the sector average) whilst it has also generated the strongest capital growth, thanks largely to its focus on small caps.
"However, this is a highly-geared investment trust and has been one of the most volatile and posted one of the largest possible drawdowns. Its dividend track record has also been relatively inconsistent."
The fifth and final trust in the sector to receive a 5-Orb rating is Miton's £390m Diverse Income trust, co-managed by Gervais Williams and Martin Turner.
According to Kepler, this trust represents another example of why investors may wish to allocate to smaller companies for income.
It said the trust is a "differentiated small-cap biased UK equity income portfolio that has significantly outperformed its peers and the FTSE All-Share since its launch in 2011 thanks to an unconstrained, dividend growth focused approach".
