Perpetual Income & Growth offers good performance at a discount

However, more recently Perpetual Income & Growth's share price has not kept up with its net asset value (NAV), meaning the trust is trading at a discount of around 3.7 per cent, notably wider than its 12-month average premium of 0.1 per cent, and one of its widest levels for around a year.

Investor anxiety about whether or not the UK will vote to leave the European Union (EU) in this month's referendum, and what impact it will have on the stock market if it does, is weighing heavily on the UK Equity Income sector. As a result, a number of investment trusts are trading on discounts, arguably making this a good time to pick up quality trusts such as Perpetual Income & Growth.

As well as generating solid returns over the long term, this trust is a consistent dividend payer, having consecutively increased its dividend for the past 16 years since its launch in 1996.

It aims to provide shareholders with capital growth and real growth in dividends over the medium to longer term from a portfolio of equities listed mainly in the UK, and fixed interest.

Mr Barnett takes a long-term, value-orientated approach. He favours companies that offer visibility of revenue, profit and cash flows, and which are managed for the primary purpose of delivering shareholder value via a sustainable and growing dividend. Financials, healthcare and consumer goods companies make up 60 per cent of the trust's portfolio, which is underweight commodities.

Mr Barnett has been managing the trust since 1996 and in March 2014 he was promoted to head of UK equities at Invesco Perpetual, following the departure of star manager Neil Woodford. At the time there were some concerns that Mr Barnett's expanded workload might negatively affect the trust's performance, but this has not materialised and he has managed to maintain good long-term performance.

However, over six months the trust has underperformed its benchmark with its NAV down 5 per cent and share price down 9 per cent against a fall of just 1 per cent for the FTSE All-Share.

Kieran Drake, research analyst at Winterflood Securities, suggests this - along with worries over a possible Brexit (UK exit from the EU) - may be contributing to the current discount. But with the trust's strong track record and current yield of 3.4 per cent he thinks Perpetual Income & Growth remains attractive.

"Perpetual Income & Growth's performance has been slightly behind some of its peers over the past few months and is also slightly lagging the FTSE All-Share. One reason for that is that it is slightly overweight mid-cap stocks.

"But on a long-term view, we still rate the manager very highly and still think it's a good option for UK equity income."

Analysts at Charles Stanley also rate Mr Barnett, saying: "He has shown an ability to get the big economic calls correct over a long investment career, and while he can suffer periods of underperformance given his often contrarian views, long-term investors have been rewarded."

So if you're interested in a quality, well-managed investment trust that offers dividend growth and solid performance over the long term, now might be a good time to add Perpetual Income & Growth before its discount tightens. Buy. EA

Source: Winterflood & *Invesco Perpetual

Performance

Source: Winterflood as at 31 May 2016

Top 10 holdings as at 30/04/16 (%)

Source: Invesco Perpetual

Sector breakdown as 30 April 2016 (%)

Source: Invesco Perpetual

IC Tip Rating