But he cautions that the ability of investment trusts to trade at hefty premiums can erode into the income earned by investment trusts.
“However, the downside in the current yield-starved environment, is that many of these investment companies trade at quite hefty premiums on the secondary market and are therefore better accessed through participation in new share placings.”
Ms Cantrell says: “BMO offer high income solutions in both open-ended and closed-ended structures.
"They can be complementary because they can differ in the frequency of their distributions (for example, monthly or quarterly) and the dates at which they pay out.”
She adds: “It is also important to diversify the source of income so that a portfolio’s yield is robust and can withstand different market developments, when for example, inflation increases and/or interest rates rise.”
Venture Capital Trusts
Mr Hollands also mentions Venture Capital trusts, another form of closed ended funds, can also be a useful source of income for investors.
“VCTs can distribute gains made on the successful exit of a holding, as tax-free dividends.”
He adds: “This ability to turn capital gains into tax-free income can prove a useful supplement alongside the natural yield generated from a conventional portfolio.”
