Pub chains and builders that dish out healthy 4pc income

TRUST WATCH Chelverton Small Companies Dividend

WHAT DOES IT DO? Managers David Horner and David Taylor aim to deliver a high and growing income to savers by investing in small-cap companies worth £500m or less, though up to a fifth of the fund can be invested in larger firms.

WHAT DOES THE MANAGER INVEST IN? The fund will only invest in companies for the first time that pay at least a 4pc income, have a good balance sheet and are likely to grow.

Among its biggest holdings are pub chain Marston’s, construction firm Galliford Try and lettings and estate agent Belvoir Lettings.

WHAT DO THE EXPERTS SAY? The trust is small, holding just £60m of savers’ cash, so it is likely to slip under the radar of most people. But while it is small, it pays a decent income of 3.22pc. It has also turned £10,000 into £26,500 in five years.

Adrian Lowcock, of multi-manager investment company Architas, said: ‘This is the sort of trust which offers excellent diversification for UK equity income seekers.’

WHAT DO THEY LIKE? Lowcock says: ‘The managers are an experienced team and focus on fundamentals, including the company’s balance sheet and business model, essential for successful investing in smaller companies.’

AND ARE THERE ANY DOWNSIDES? Its focus on smaller companies means it is likely to be more volatile than investing in a trust that tries to drum up a decent income from investing in larger companies. Plus, with an annual management charge of 1.89pc, it is quite expensive.