With this in mind, let’s take a look at two dividend-paying investment trusts targeting different geographic regions. Each I believe is worth exploring further as candidates for inclusion inside an ISA.

Asia

Let’s start with Asia, the world’s fastest growing area. Despite being projected to contribute around 43% of the world’s GDP growth, China and India together account for just 6% of the MSCI All Country World Index. 

By contrast, the US makes up around 65%. Yet this gap’s set to narrow over the next decade as investors seek out cheaper valuations and portfolio diversification amid unpredictable US policy. 

One trust I like the look of is Schroder Oriental Income Fund (LSE:SOI). Despite rising 33% over the past year, the FTSE 250 trust still sports a decent 3.4% dividend yield.

It has a solid track record of dividend growth and is on track to become one of the Association of Investment Companies’ Dividend Heroes. Those are trusts that have hiked their annual dividend for at least 20 straight years. Schroder Oriental Income Fund has now done 19.

One risk here is high concentration, with Taiwan Semiconductor Manufacturing Company (TSMC) making up 13% of assets. If the artificial intelligence (AI) revolution runs out of stream, then this large holding in the world’s largest chip manufacturer could hold back performance.

Seen from a different angle however, it allows investors to benefit from the AI infrastructure boom while still collecting a dividend. TSMC’s foundries are absolutely humming. 

Elsewhere, the portfolio offers exposure to Singapore, Hong Kong, China and Australia. Plus, the shares are trading at a 5.2% discount to net asset value (NAV).

Latin America

Next, we have BlackRock Latin American Investment Trust (LSE:BRLA). This holds a number of stocks from Latin America, which is home to around 650m people.

Again, despite rising 41% in the past year, the dividend yield here is still decent at 4.6%. Top holdings include mining giants Vale and Southern Copper, as well as Grupo Aeroportuario del Sureste and Wal-Mart de Mexico.

There’s also a bit of high-growth zip in there with Nu Holdings (Nubank), the world’s largest digital bank outside China.

Concentration risk is also an issue here, with Brazil accounting for around 62% of the portfolio. While it’s the largest economy in Latin America, inflation there is also still quite high.

Then again, Brazil’s experiencing the strongest tourism surge in its history, and has a rising tech sector. So the economy’s on an upwards trajectory.

The explosion of digital payments in Brazil has created an innovative financial ecosystem that works for ordinary people. This progress is the result of a combination of an overhaul in the payments regulatory framework, intensive use of technology, entrepreneurship and a focus on creating products that address the needs of Brazilian customers.

World Economic Forum.

Meanwhile, Mexico’s set to benefit as US companies bring manufacturing closer to home and away from China (so-called friendshoring). Mexico has the second-largest country allocation, at around 23%.

Finally, the shares are trading at a 6.5% discount to NAV, offering what I deem to be an attractive entry point to consider for international income investors.

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One that’s done really well for me recently (following three tricky years) is Pacific Horizon Investment Trust (LSE:PHI). It’s invested in growth companies across the Asia Pacific region, and last year it returned nearly 37%.

In 2026, I’d like to diversify my portfolio and get more exposure to Asia. Here’s why.

High-growth region

There are a few key reasons. Firstly, there’s China, which is just too important to be ignored. We’ve already seen Chinese firms rise rapidly in e-commerce (Temu), social media (TikTok), electric vehicles (BYD), and toys (Labubu dolls).

Today, four of the 10-most downloaded apps in the US are Chinese (Temu, TikTok, CapCut, and Chinese-founded Shein). I fully expect other massive global businesses to emerge from China in areas such as semiconductors, sportswear, robotics and pharmaceuticals.

China currently makes up nearly 20% of global GDP but just 3%-or-so of global stock market indices. Even a modest reallocation away from an increasingly unpredictable US over the next decade would likely boost Chinese stocks and therefore Asia-focused funds.

Meanwhile, resilient economies like Vietnam are still growing strongly despite Trump’s tariffs. Indeed, in 2026, Goldman Sachs expects the MSCI Asia Pacific ex-Japan Index to generate 19% growth in earnings per share versus 12% for the S&P 500.

“Investors should look for opportunities for broad geographic exposure, including an increased focus on emerging markets”, the bank said.

Growth trust

But personally, I’m not keen on buying individual Chinese stocks. Instead, I prefer Asia-focused investment trusts that offer me diversified exposure, such as the Pacific Horizon Investment Trust.

As mentioned, it’s focused on growth. Its top holdings are Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics, the two foundries making most of the advanced AI chips today. Elsewhere, we have TikTok owner ByteDance and copper and lithium giant Zijin Mining Group.

Currently, Pacific Horizon’s trading at an 8.4% discount to its underlying net asset value (NAV). So I’m tempted to buy more shares for my portfolio.

Adding in dividends

However, I’d like to increase my Asia exposure even further, which is why Schroder Oriental Income Fund‘s (LSE:SOI) also caught my eye.

As its name suggests, this one also focuses on dividend-paying firms from the region. As such, we see more mature businesses in the portfolio including Singapore Telecommunications, BOC Hong Kong Holdings, Telstra Group, and NetEase.

Schroder Oriental Income has grown its dividend every year since launch in 2005, and the starting yield today is a respectable 3.4%.

That said, I see concentration risk here with these two trusts. They both have TSMC as their top position with a massive 13% weighting. If the chipmaker’s shares sell off aggressively, then performance could suffer for both.

I also hold TSMC shares, so this increases the risk for my own portfolio. And another sudden round of punitive tariffs on Asia from President Trump also can’t be ruled out.

Schroder Oriental Income, which is trading at a 3.7% discount to NAV, reports its half-year results in February. If I still like what I read then, I plan to open a position in the trust.

The post 2 top FTSE 250 trusts I’m eyeing up for my Stocks and Shares ISA appeared first on The Motley Fool UK.

High-quality infrastructure assets

Let’s start with 3i Infrastructure (LSE:3IN). This investment trust has stakes in 12 assets spanning areas including energy networks, fibre broadband, and transport infrastructure. These generate long-term, often inflation-linked cash flows, underpinning predictable income. 

Given this stability, the forward-looking dividend yield isn’t particularly high at 3.8%. However, 3i Infrastructure has delivered 14% annualised returns since going public nearly 20 years ago. So this is a high-quality income trust.

Now, one risk here is that the portfolio is quite concentrated. For example, it has a chunky 16.5% weighting towards TCR Group, which is Europe’s largest independent manager of airport ground support equipment. So were problems to emerge at TCR, this would be an issue for 3i Infrastructure.

However, in the six months to 30 September, total income and non-income cash increased by 18%, setting the trust up for a 6.3% hike in the annual dividend. The long-term dividend growth prospects look very strong.

Right now, investors can pick up shares of the trust at a very attractive 9.2% discount to net asset value (NAV).

Our largest investment, TCR, continues to outperform expectations and deliver significant value growth. We remain confident in the long-term growth potential of the portfolio. The Company is on track to deliver results ahead of its return target for this financial year. 3i Infrastructure.

Income from Asia

Heading eastwards now with Schroder Oriental Income Fund (LSE:SOI). I find this trust’s investment proposition attractive: “Asian companies are increasingly world-leading and returning cash to shareholders. The Schroder Oriental Income Fund aims to tap into the Asian income story and help investors diversify their dividends“.

Top holdings here include Taiwan Semiconductor Manufacturing (TSMC), Samsung Electronics, and Singapore Telecommunications. It also has a smattering of Australian dividend stocks including Telstra Group (Australia’s biggest telecoms provider).

The share price is up 20% year to date. Despite this, the trust still offers a decent 3.7% starting yield.

Of course, investors would have to take the long view here, as US tariffs aren’t ideal for many Asian firms in the near term. There could be some volatility in 2026 if trade tensions flare up once more.

Again though, I see this trust as having solid dividend growth prospects. By 2050, emerging Asia could account for more than 50% of global growth. Plus, with holdings like leading chip foundry TSMC and China’s NetEase (a video game powerhouse), I think the share price will also do well.

Schroder Oriental Income Fund is currently trading at a near-5% discount to NAV.

Foolish takeaway

As mentioned, these two trusts don’t have huge 10%+ yields like some others in the FTSE 250 today. Yet through a combination of growth and income, I reckon considering them can build wealth inside a diversified ISA portfolio.

The post 2 investment trusts from the FTSE 250 worth digging into for passive income appeared first on The Motley Fool UK.

Essentially then, an investor can buy £1 worth of investments for, say, 90p. If that gap later closes, this can boost returns. Of course, it can also widen, so there’s risk as well as opportunity. In other words, no free lunch!

Here are three investment trusts trading at a discount that I think are worth a closer look today.

Asia growth

First up, we have Pacific Horizon Investment Trust (LSE:PHI) from the FTSE 250. This one aims to achieve capital growth through Asian stocks (excluding Japan).

Top holdings include Taiwan Semiconductor (TSMC), Samsung Electronics, Tencent, ByteDance, and Sea Limited. These companies provide exposure to plenty of era-defining trends, including semiconductors, artificial intelligence (AI), e-commerce, cloud computing, fintech, and the energy transition through miners Zijin Mining and MMG.

Long-term performance has been excellent. The trust has returned 368% over the past 10 years, versus just 163% for its benchmark (the MSCI All Country Asia ex Japan Index).

I mention the long term because I think that’s the best time horizon with this trust. But in the near term, there could be some turbulence from tariffs, negatively impacting the performance of some holdings.

Over the next two decades though, the Asia Pacific region is expected to drive most global growth, supported by favourable demographics and the unstoppable rise of its global middle class.

Right now, investors can pick up shares of Pacific Horizon for 760p, which represents a 9.5% discount to NAV.

Asia income

Sticking with this theme, we have Schroeder Oriental Income Fund (LSE:SOI). Despite a share price rise of 20% this year, there’s still a 4.6% discount to NAV.

As the name implies, this one focuses on income rather than out-and-out growth. Therefore, the holdings are from more mature industries such as banks (Oversea-Chinese Banking Corp and DBS Group) and telecommunications (Singapore Telecommunications and Australia’s Telstra).

The same risk applies here, with President Trump’s tariffs on Asian imported goods causing massive uncertainty. But I think the same rewards apply, with the added potential bonus of a rising income stream.

Indeed, the FTSE 250 trust has grown its payout every year since launch in 2005. The dividend yield currently starts at a respectable 3.65%.

Asian companies are increasingly world-leading and returning cash to shareholders. The Schroder Oriental Income Fund aims to tap into the Asian income story.

Schroder Oriental Income Fund.

Top hedge fund

Finally, turning to the FTSE 100, I want to highlight Pershing Square Holdings (LSE:PSH). This trust gives exposure to the hedge fund strategies of billionaire Bill Ackman.

Now in this case, I think some level of discount might be justified. That’s because Pershing manages a highly concentrated portfolio of 10-12 stocks. Arguably, this is a conviction bet on Ackman’s skill.

However, the 27.4% discount looks excessive, especially as Ackman appears to have lost none of his stock-picking skill. For example, Alphabet‘s up around 150% since Pershing started loading up in Q1 2023. Uber‘s also flying (+35% since early February when Ackman announced a position).

For investors interested in a top-performing hedge fund, I think the stock’s worth digging into.

The post 3 top FTSE investment trusts to consider before Halloween appeared first on The Motley Fool UK.

Here are three that are worth exploring further.

UK property income

Let’s start with the iShares UK Property ETF (LSE:IUKP), which holds 33 UK real estate investment trusts (REITs). These include LondonMetric Property (logistics and retail warehousing), Primary Health Properties (GP surgeries and health centres), Unite (student accommodation), and Big Yellow (self-storage).

This sector remains out of favour due to higher interest rates. Rising borrowing costs restrict portfolio expansion plans, while investors can now find attractive yields in perceived safer havens like government bonds.

The fact that this ETF is concentrated on one sector makes it higher risk. Were the UK property market to enter a prolonged slump, this product would carry on underperforming (it’s already down 20% in five years).

On the plus side, though, investors are being offered a 4.5% dividend yield while they wait for a potential recovery. This should materialise as interest rates slowly but surely come down over the next couple of years.

Many [UK REITs] are trading at significant discounts to their net asset value, offering investors the chance to acquire real estate below its true value.

Kenneth MacKenzie, CEO of Target Healthcare REIT

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Asia Pacific dividends

To diversify an income stream away from UK property, an investor might also look at the Schroder Oriental Income Fund (LSE:SOI). This FTSE 250 investment trust offers broad exposure to dividend-paying companies across the Asia Pacific region.

What I like here is the trust offers a healthy level of geographic diversification. Mainland China accounts for just over 18% of assets, with the bulk of the rest made up of Taiwan, Australia, South Korea, Hong Kong, Singapore, and India.

Holdings include Samsung Electronics and Singapore Telecommunications, as well as DBS Group (Singapore’s largest bank). But it does have an outsized position in Taiwan Semiconductor Manufacturing. Any weakness in the Taiwanese chipmaking giant’s share price could negatively affect performance.

The rest of the ETF looks well-diversified, though. And over the next decade, I expect institutional investors to start allocating more capital outside the S&P 500. Asia should be a natural beneficiary of this — it’s worth noting that the trust has returned more than 20% year to date.

Finally, while Schroder Oriental Income Fund is trading at a record high, it still carries a decent 3.7% trailing dividend yield.

Cybersecurity trend

Finishing with more of a growth angle, we have the iShares Digital Security ETF (LSE:LOCK). This one holds 111 stocks across cybersecurity, including leading players like Arista Networks, MongoDB, Datadog, and Cloudflare.

As we’ve seen recently with high-profile hacks at Jaguar Land Rover and Marks and Spencer, beefing up cybersecurity is becoming a key operational necessity. And this spending is sure to be benefitting many of the ETF’s top holdings.

One risk I would highlight here is valuation. The average trailing price-to-earnings multiple of the ETF’s holdings is around 30. Were tech stocks to tumble, this would hit the fund.

However, to my mind, the cybersecurity trend just has so much further to run, especially as AI rapidly develops. I think investors should consider getting some portfolio exposure.

The post 2 ETFS and a FTSE 250 trust to consider from the London Stock Exchange appeared first on The Motley Fool UK.

Footsie blue chip

First up is HSBC (LSE:HSBA). The Asia-focused bank has been in the news this week because it demonstrated the world’s first-known quantum-enabled algorithmic trading with US tech giant IBM.

The quantum computer helped solve a real-world problem in bond trading, delivering up to a 34% improvement over standard methods in predicting how likely a trade would be filled at a quoted price.

Philip Intallura, HSBC Group Head of Quantum Technologies, commented: “We have been relentlessly focused on the near-term application of quantum technology, and… we have great confidence we are on the cusp of a new frontier of computing in financial services.”

Of course, this quantum stuff won’t move the needle in the near term, but it highlights how the firm is focused on innovation in the financial industry. And the stock got a little boost, putting it within a whisker of another all-time high.

The share price has now surged 265% in the past five years, excluding dividends.

Despite this rise, HSBC still appears to offer value. It’s trading at less than 10 times forecast earnings while sporting a 5.1% forward-looking dividend yield.

As for risks, there might be some economic volatility ahead, with significant uncertainty remaining over tariffs and trade. Any downturn across Asia would be bad for HSBC’s near-term growth, as the majority of the bank’s profits are sourced from the region.

Longer term, however, HSBC’s growth prospects remain undimmed. Asia is still tipped to drive the bulk of global economy growth, with a booming middle class that will need more banking and wealth management services.

Mid-cap trust

Sticking with Asia, the same opportunities apply to Schroder Oriental Income Fund (LSE:SOI). This FTSE 250 trust manages a ‘best ideas’ portfolio of 60-80 names.

Unlike the UK, Asia Pacific is not often associated with dividends. Yet, as the fund points out, it has “upped its game in the dividend stakes in recent years“.

Indeed, the MSCI All Countries Pacific excluding Japan Index has roughly yielded the same as UK indexes in recent years.

Top holdings here include Taiwan Semiconductor Manufacturing (TSMC), Singapore Telecommunications, and Samsung Electronics. As the world’s largest chip foundry, TSMC is booming right now due to incredible demand for AI chips.

Of course, the fact that the trust is invested across economies as varied as China, Australia, Taiwan, and Korea adds currency risk. It could lose value as a result of wild movements in foreign exchange rates.

Also, I don’t expect the growth trajectory in Asia to be smooth. There will be various ups and downs along the way.

But the region has a massive population and consumer base. And it’s producing an increasing number of world-leading companies (BYD, CATL, ByteDance/TikTok, TSMC, etc). I expect this trend to increase in future, along with investor interest in Asian equites.

The Schroder Oriental Income Fund has a good long-term track record (19 consecutive years of dividend growth). With the yield currently near 4%, I reckon the stock is worth considering for its long-term income potential.

The post 2 UK stocks to consider to target a second income in an ISA appeared first on The Motley Fool UK.

Here are two from the FTSE 250 index that might be of interest.

Blue-chip holdings

Merchants Trust (LSE:MRCH) aims to deliver a “high and rising income together with capital growth“.

Founded in 1889 and managed by Allianz Global Investors, it invests mainly in high-yield FTSE 100 dividend stocks. So we’re talking Lloyds, Shell, BP, and so on.

However, the £823m trust is quick to point out that many of these are multinationals. GSK, for example, sources more than half of revenue from the US, while British American Tobacco‘s tentacles stretch from Latin America to Asia and just about everywhere in between.

Impressively, Merchants has grown its payout for 43 consecutive years at an annualised growth rate above inflation. At 553p, the dividend yield is 5.3%, which is above the FTSE 100 average of about 3.4%.

One developing risk here is that two of the top five holdings are UK banks (Lloyds and Barclays). Earlier this week, an influential think tank said the cash-strapped government should consider taxing the interest banks receive from reserves held at the Bank of England.

If this idea became policy, bank stocks would probably fall lower and their dividend growth could be jeopardised. This could have a knock-on effect on the trust.

This is just speculation, though, and Merchants has lived through far worse, including two World Wars and the Wall Street crash. I expect it will survive a potential bank tax raid by the government.

Finally, the trust is trading at an attractive 10% discount to its net asset value (NAV).

Looking eastwards

The second FTSE 250 trust I think is worth digging into is Schroder Oriental Income Fund (LSE:SOI).

The trust does what it says on the tin, providing shareholders with a way “to tap into the Asian income story and help investors diversify their dividends“.

The [Asian] region is forecast to enjoy higher economic growth than many other parts of the world over the medium to longer term. Favourable demographics and a growing middle class in Asia are expected to continue to fuel strong domestic consumption — increasing the prospects for both capital and income growth.

Schroder Oriental Income Fund

Turning to the portfolio, there are 60-80 stocks spread over multiple countries and in a range of industry sectors. Names include Samsung Electronics, Singapore Telecommunications, and Telstra Group (Australia).

In July though, the trust’s top holding was Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading chip foundry. Now, this may not scream juicy dividends because the stock is up 200% in five years, with the current dividend yield only 1.3%.

However, this is because TSMC is prioritising investments to capitalise upon AI opportunities rather than income. With a 12.6% portfolio weighting, though, there’s a risk this large holding could affect performance if AI growth slows.

Nevertheless, I expect TSMC to increase payouts substantially in future due to its incredible margins and dominant market position.

The trust is currently yielding just under 4%. Add in potential share price growth in future, and I like the long-term prospects here.

The post 2 top FTSE 250 investment trusts to consider for passive income appeared first on The Motley Fool UK.

With this being the case, I think it’s best to leave the challenge of picking dividend stocks to the professionals. So today, I’m looking at my two favourite income investment trusts for 2019.

Income and growth

My first pick is the Lowland Investment Co (LSE: LWI). Managed by James Henderson and Laura Foll, this investment trust tries to pick equities across the spectrum. The managers (who have several decades of experience picking stocks between them) like small and mid-cap stocks for their growth potential, but also like large-cap stocks that produce a steady level of income.

Over the years this has proven to be a potent combination. The trust currently supports a dividend yield of 4.1% and over the past five years has churned out steady capital gains averaging around 2% per annum, although, like the rest of the market, the share price has suffered significantly in recent months. Over the past 12 months, the Lowland share price is down 11%, slightly more than its benchmark loss of 8.7%.

Still, I think in the long term this company should prove to be a winner particularly when you include reinvested dividends. At the time of writing, the shares are trading at a discount of around 0.6% to the net asset value (the five-year average is 2.9%), and the annual management charge is 0.57%, which is relatively modest.

If you are looking for income, it is worth keeping an eye on this trust in my opinion.

Overseas income

Lowland is a UK-focused investment trust, so its performance is tied to that of UK markets. In comparison, the Schroder Oriental Income Fund (LSE: SOI) can hunt for income around the world. 

According to the fund’s latest update, around 16% of its assets are invested in Hong Kong, 13% in China, 13% in Australia 11% in South Korea and the rest across other regions around the world. Only 6.2% of the fund’s net asset value is invested in UK equities.

Schroder Oriental was first launched in 2005, and since then it has proven itself as an income play. At the time of writing, shares in the trust support a dividend yield of 4.2%. Over the past 10 years, every £10,000 invested has grown into £39,000 with dividends reinvested, a compound annual return of 16.3% per annum for investors.

While past performance is no guide to the future, I think this trust can continue to produce at least mid-single-digit per annum returns for investors after including dividends for the foreseeable future. Economic growth across Asia is showing no signs of slowing down, and for UK investors, Schroder Oriental offers great diversification away from the uncertainty of Brexit.

Right now the firm is trading at a small premium to net asset value of 2.2% compared to the 12-month average of 0.1%. The ongoing annual management charge is 0.84% per annum, which I think is relatively modest considering the level of returns the trust has produced over the past decade.

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