Where will the pieces land?

After every stock market crash there is a palpable sense of excitement and alarm over what will emerge from the wreckage. This has been accentuated in the coronavirus upheaval where the financial and health crises are not only reshaping the world by accelerating existing trends and embedding new ones in response to social distancing, but have been accompanied by a bewildering rebound in equities and bonds since the March panic.

The relief rally we’ve seen in the past three months combines excessive optimism over what the re-opening of economies will entail, allied with faith in central banks like the US Federal Reserve employing whatever radical monetary policies they can to reboot the old order. Some things don’t change.

Big questions remain, however. Such as, where will we work and what will offices look like in the ‘new normal’? And will they command the same rents and valuations as they did before? That’s what commercial property fund managers are wrestling with, as Michelle McGagh finds in our third feature.

Many share prices have recovered but UK dividends haven’t. Payouts to shareholders in London-listed companies could halve this year and, according to a Schroders forecast, may not reach their 2019 level for 10 years. This recession may not involve the lengthy period of austerity that followed the 2008 banking crisis, but its affect on investors is set to be equally long-standing.

Fortunately, as Jennifer Hill reports in our second feature, there are plenty of good investment trusts accessing dividends from around the world for income seekers to turn to.

But the dividend drought presents a huge challenge for UK equity income trusts, notwithstanding the revenue reserves most have to support their income distributions.

In our first article we’ve had a stab at choosing 10 of the 24 trusts in the AIC UK Equity Income sector that might be best positioned, but it’s a difficult task not knowing which corporate cash flows will turn back on and which will run dry.