M&G Credit Income (MGCI)

M&G Credit Income (MGCI) owns a highly diversified portfolio of fixed income assets and offers a very high yield (7.7% at the time of writing) without taking the risks that would typically be required to achieve it, and without the use of structural gearing. The trust invests across all segments of the public and private debt markets, taking advantage of M&G’s deep resources to exploit the extra yield that can be earned in complex and illiquid securities, all within a closed-ended wrapper which facilitates this while providing the end investor daily liquidity.

Many of the specialist areas it invests in offer floating rate coupons, meaning that as interest rates rise, the income the trust receives rises too. With central banks currently under pressure to raise rates, and 78% of the portfolio offering as floating rate coupon, this could be a particularly attractive feature. And as the trust’s dividend policy is to pay 4% of NAV plus SONIA (an interbank rate which tracks the base rate) each year, the dividends paid by the trust will rise if rates are indeed hiked.

One of the key objectives of the trust is to deliver this high yield along with low NAV volatility. To that end, the manager Adam English takes a defensive approach to sector and stock selection and a relative value approach when it comes to making investments. Over the past two years the portfolio has been very defensively positioned, with Adam unimpressed by the spreads being offered for credit risk. Nonetheless, the trust paid its high dividends, aided by the flexibility of the mandate. Over 2026, however, Adam has made significant investments in new private debt assets, which has seen the proportion held privately rise. This should hopefully feed through into higher portfolio income, although MGCI has also continued to see strong inflows which are initially parked in higher quality, liquid assets. The trust has been on a premium for most of the past two years, and this stood at 2% at the time of writing.

The board has consequently announced a placing and retail offer of new shares to be issued at a 1.5% premium, with the fundraising to close on 20/10/2026.