CT UK High Income (CHI)

CT UK High Income (CHI) has continued to evolve under David Moss, with Portfolio refinements reflecting his emphasis on income sustainability and diversified growth drivers as he approaches his third anniversary at the helm. Over the past year, changes have continued to illustrate his active approach: allowing winners to run where appropriate, whilst remaining willing to reassess positions as new information emerges.

Admiral, for example, was initiated amid stabilising inflation and improving capital returns, with the trust benefitting from its special dividend. However, the position was exited several months later as new developments challenged the original investment case. Proceeds were recycled into opportunities including Prudential, where David sees a more compelling blend of current income and structural growth through its Asian franchise. Elsewhere, Croda and Next were added on valuation grounds. On the sell-side, SSE was exited following strong performance and yield compression, with capital reallocated into higher-yielding Ashmore. Positions in Pearson and Experian were also sold.

This disciplined and valuation-aware approach has translated into improved outcomes. Since David assumed lead responsibility in July 2023, the trust has delivered a NAV total return of 53.0%, ahead of the FTSE All-Share’s 49.8%. Performance over the past 12 months has also been strong despite a volatile backdrop. In a year marked by geopolitical tensions, shifting rate expectations and AI-driven market rotations, the trust delivered a NAV total return of 21.2%, slightly behind the FTSE All-Share’s 23.7%. The share price total return, however, was stronger at 25.4%, reflecting both underlying performance and a narrowing of the discount.

The trust currently offers a net Dividend yield of 4.8% on the ordinary shares (CHI). The B shares (CHIB) provide a comparable yield of around 4.8%, delivered through capital repayments rather than dividends. The trust has also increased its distributions for 12 consecutive years and, based on dividends/capital repayments declared year to date, appears on track to extend this record in the 2026 financial year, although there are no guarantees.

At the time of writing, CHI trades at a small premium compared with a five-year average Discount of 5.4%, whilst CHIB trades at a c. 0.2% discount versus a five-year average of 5.6%.