However, if you’re prepared to take on additional risk, you may want to consider investing in investment trusts. Buying shares in an investment company is a quick and relatively inexpensive way to help diversify your investments, and there are some very eclectic trusts which generate reliable high yields that are backed up by relatively safe underlying investments.

P2P investing

Peer-to-peer lending has grown rapidly in recent years and is fast becoming a popular source of income for investors hunting for better returns than those offered by savings accounts.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

Discount to NAV

P2P Global Investments is particularly worth considering because the fund trades at a big discount to its net asset value (NAV). Although the discount had narrowed substantially since it announced plans to improve its loan book performance in April, the valuation gap has begun to widen again in recent weeks. Shares in the fund now trade at a 24% discount, meaning investors can buy into the loans portfolio for less than the sum of its parts.

Sure, concerns about rising default rates will continue to sway its shares, but I reckon these fears may be overblown. And even if I’m wrong, its sizeable discount offers a cushion against any painful eventualities.

Aircraft leasing

For investors willing to take on a bit more risk, Amedeo Air Four Plus (LSE: AA4) offers potentially greater rewards.

The investment company seeks to obtain income and capital returns for its shareholders by acquiring, leasing and selling aircraft. Its a business model which generates a reliable income stream that is secured against a very movable, hard tangible asset.

With the steady rental income that the aircraft lessor receives, it pays a quarterly dividend of 2.065p per share, giving its shares an attractive current yield of 8%.

Downside risk

One major downside risk is that uncertainties about resale values could be a major concern for investors. All aircraft are leased from the company for a period of 12 years, meaning planes can be returned to the company after that period. Aircraft lessors are usually then able to sell the asset or re-lease it for reasonable value, but that isn’t always the case.

AA4’s eight Airbus A380s are of particular concern, because demand for the aircraft is very limited. Dr Peters Group, a German leasing company, recently placed an A380 into storage after Singapore Airlines decided to retire the plane from service and return it to its lessor.

One consolation is that AA4 has recently been diversifying its portfolio to include other aircraft types, such as the A350 and the Boeing 777. I expect further new aircraft acquisitions will occur in the future, reducing the risk even more.

The post 2 investment trusts for income investors seeking reliable high yields appeared first on The Motley Fool UK.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Low rates

With the Bank of England base rate at just 0.25%, many savers are struggling to earn a decent income from their savings. Fed up with low rates, canny savers are having to look elsewhere to beat low returns.

Investing in peer-to-peer lending is one way to improve the return on your savings, but for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform and micro-managing each debt investment, P2P Global Investments (LSE: P2P) offers an alternative route for savers to gain access to the sector.

Shares in the investment trust have gained 12% since April, after the fund manager announced a review of its performance in light of falling returns. It has since decided to gradually shift towards sectors with better risk‐adjusted returns and reduce its exposure to US consumer loans, due to rising currency hedging costs. This helped to improve investor sentiment, and narrowed its share price discount from 24% of it net asset value (NAV) at the start of April, to around 13% now.

At a current price of 861p a share, P2P Global Investments currently trades at a dividend yield of 5.6%.

Utilities and infrastructure

Alternatively, investing in defensive stocks, particularly utility and infrastructure stocks, is another popular choice for income investors seeking to beat low returns on savings. Utilities are generally regarded as defensive investments which pay shareholders a safe source of income year after year. But instead of just buying the likes of National Grid and Severn Trent, why not diversify geographically to potentially boost returns and reduce risk?

Of course, you could directly buy into foreign utility equities, but then you would have to deal with the added complexity of tricky tax implications, foreign exchange transactions and additional research demands.

Instead, investing in a fund such as the Ecofin Global Utilities And Infrastructure Trust (LSE: EGL) would be so much easier for most. The investment trust is traded similarly to any UK stock, and the fund is professionally managed by Ecofin, an independent London-based asset management firm that specialises in investing in such sectors.

This fund puts its money primarily in utilities and other economic infrastructure equities, with the aim to deliver a total return (that is the sum of capital gains, dividends, interest and other distributions), of 6%-12% per annum over the medium-to-long term.

Europe, including the UK, is its largest geographical exposure, representing 50.1% of total assets, and this is followed by North America, which accounts for a further 39.2%. Top holdings include French water and waste management company Suez (4.9%), German utility Innogy (4.7%), SSE (4.3%), US energy infrastructure firm Williams Companies (3.7%) and US waste-to-energy company Covanta (3.4%).

With shares in the investment trust trading at a discount to its NAV of 13%, I reckon the fund could be a tempting play on rising infrastructure spending globally, with its yield of 5%.

The post 2 discounted investment trusts for income investors appeared first on The Motley Fool UK.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Of course, we’re all familiar with the disruption and ‘disintermediation’ (cutting out the middlemen) wrought by multi-billion-dollar giants, such as Amazon and Uber, but the fintech revolution has been rather more low-key. Fintech companies aren’t trying to pummel the whole financial industry into extinction but are intent on taking sizeable chunks of business from traditional incumbents.

Bloated with layers of intermediaries and widely distrusted since the 2008/9 crisis, the mainstream financial industry is under attack from fintech upstarts that are not burdened with legacy issues and systems and whose reputations are untarnished by the past.

Given Neil Woodford’s long-prevailing dislike of the big banks, it’s perhaps not surprising that he’s attracted by the relatively simple business models and exciting investment opportunities in the fintech sector.

Attractive income stream

Woodford is invested in some unquoted fintech companies, such as RateSetter, a peer-to-peer lending platform, and Seedrs, which opens up venture capitalism “to anyone with an internet connection”. However, he also has two holdings that are listed on the stock market — and very interesting they are too.

P2P Global Investments (LSE: P2P) is a FTSE 250 firm with a market cap of around £700m. Woodford’s team describes the business as follows: “This is a company that invests in a range of online peer-to-peer lending platforms and loans. It uses a proprietary technology system to seek out the highest quality loans available on these platforms. To manage risk, it targets a diversified portfolio of loans to both consumers and businesses across multiple geographies. It can also often invest in the platform providers directly. This leaves it well placed to deliver a stable and attractive income stream to its shareholders.”

Woodford first bought shares in the company at 1,000p in January 2015 but you can pick them up today for 840p. At this price, if analyst dividend forecasts can be believed, the yield for 2017 will be a whopping 11%.

Another to consider

VPC Specialty Lending Investments (LSE: VSL) is in the FTSE SmallCap index but is a decent-sized company with a market cap of around £290m. Its business is similar to P2P’s and like the FTSE 250 firm, considerable quantities of cash flow into shareholders’ pockets.

Analyst dividend forecasts for the current year give another tremendous yield — 9.4% at a current price of 77p. Woodford paid 100p when he bought in the company’s IPO in March 2015.

On the face of it, P2P and VPC look interesting prospects to consider, particularly for investors seeking a high income. But I’d want to understand the sector and these businesses in a little more depth before committing any cash even with Woodford being evidently keen.

If you don’t fancy pureplay fintech, Woodford is also a big fan of companies that combine traditional and fintech approaches. Two of his holdings of this nature that could be worth checking out are sub-prime lender Provident Financial and hybrid property agent Purplebricks.

The post Which fintech stocks does Neil Woodford own? appeared first on The Motley Fool UK.

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G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Emerging markets

Templeton Emerging Markets (LSE: TEM) has had a great year thanks to the recovery in emerging market equities and the slump in the value of sterling. The trust’s shares are up 68% over the past 12-months, and even its discount to NAV has narrowed from a peak of above 20% to just 13%.

Today, valuations are not as cheap compared to a year ago, but emerging market equities still appear to be trading at a discount to developed markets. Commodity price volatility and Trump’s uncertain trade policy still pose big risks for emerging market investing. But the trust’s manager Carlos Hardenberg reckons developing economies are, in most cases, now more defensive and less vulnerable than they have been in the past.

Unquoted investments

Caledonia Investments (LSE: CLDN) has two interesting features. First, the trust is self managed, which means it employs an in-house investment fund manager, instead of hiring an external management company. This can allow it to take a long-term investment approach, which could give it an advantage over other investment companies.

Second, the trust invests a significant proportion of its portfolio value in unquoted companies — 42% at the end of January. This gives individual investors exposure to a sector which is generally difficult to get access to. The performance and valuations of unquoted companies tend to be less dependent on general stock market trends, which offers investors diversification benefits by reducing portfolio risk.

The trust has an impressive dividend track record, with 49 consecutive years of annual dividend increases under its belt. Shares in Caledonia Investments currently trade at a 16% discount to NAV and yield 1.9%, based on today’s share price of 2,770p.

Peer-to-peer lending

The Bank of England’s decision last August to reduce the base rate to 0.25% has piled even more downward pressure on returns offered by banks on cash balances. With interest rates so low, canny savers are having to look elsewhere to park their cash.

Investing in peer-to-peer lending can be a great way to boost your returns. But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector.

The investment trust, which focuses on buying peer-to-peer loans, offers investors exposure to the much larger US market, in addition to the UK, European and Australasian markets. This also adds diversification, which can help to reduce overall investment risk. In addition, the trust owns equity stakes in the lending platforms, which may offer investors potential capital gains on top of the steady income generated by its portfolio of loans.

Concerns about the lending practices of peer-to-peer platforms and their ability to withstand a more difficult economic environment have no doubt shaken confidence in the market. But with P2P Global Investments currently trading at a discount to NAV of 20%, I think these fears are overdone.

P2P Global Investments currently trades at a trailing dividend yield of 5.9%.

The post These investment trusts could help you to retire early appeared first on The Motley Fool UK.

More reading

• Up 12% in a month, Hollywood Bowl is a UK dividend stock on a roll
• Young investors are taking the stock market on a rollercoaster ride. Here’s how retirees can buckle up
• £7,500 invested in Aviva shares 5 years ago is now worth…
• Could £20,000 invested in these 5 dividend shares produce £14,760 of passive income over the next 10 years?
• At 570p, is it too late to consider buying BP shares?

Jack Tang has a position in P2P Global Investments. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.