Every month, we challenge a seasoned fund or investment manager with probing questions for our I’m a Fund Manager series, aiming to uncover insights into their personal financial strategies.

We delve into where they plan to invest over the next year and decade, as well as the common pitfalls to steer clear of in the investment world.

Our inquiries also cover hot topics like Nvidia, gold, and Bitcoin, along with discussing what they consider to be their biggest investment blunder.

This week, we had the opportunity to speak with Rebecca Maclean, a fund manager at the Dunedin Income Growth Investment Trust.

Established in 1873, this trust stands as one of the UK’s most enduring investment institutions, boasting a 45-year history of consistent or increasing dividends.

The trust’s main goal is to provide both income and capital growth for its investors, primarily through a portfolio consisting of companies that are listed or quoted in the UK.

The income element is hard to argue with. As of its 9 September share price (294p), the trust offers a dividend yield of 6.5 per cent. 

This compares to an average of 4.1 per cent among peers in the Association of Investment Company’s UK equity income sector. 

Dunedin Income Growth Investment Trust shares are up by 11.9 per cent over the last 12 months and 48.9 per cent over the last five years, trailing an average of 18.3 and 82.2 per cent over each period, respectively, among sector peers. 

The Trust currently trades at a 8.54 per cent discount to its net asset value, according to Hargreaves Lansdown. 

Its biggest holdings include TotalEnergies, RELX, NatWest and National Grid.

1. If you could invest in only one company for the next 10 years, what would it be?

To hold a stock with confidence for the next decade, I look for three qualities: financial resilience, a durable competitive advantage and trusted management that allocates capital wisely to create long‑term value. 

In short, I want businesses built like seaworthy ships; strong, reliable, and able to navigate choppy waters.

RELX is one of those vessels. It’s a major holding in the funds I manage, and I bought it in my children’s Junior Isas. 

The company provides essential data and analytics to scientists, academics, lawyers and businesses – services that are relied on daily and hard to replace. 

Over 80 per cent of its revenues come from repeat subscriptions, giving it a dependable growth engine.

While many technology names have surged on the back of the AI rally, RELX has lagged. Yet it has long embedded AI into its products, quietly strengthening its offering. 

Far from being capsized by disruption, RELX is already harnessing the winds of change that should allow it to compound steadily over time.

2. What about for the next 12 months?

Softcat is my pick for the next 12 months. In a UK economy where growth is subdued, companies with genuine structural drivers stand out. 

As the country’s leading technology reseller, Softcat is forecast to grow profits by more than 10 per cent this year. 

Technology spend is no longer optional for SMEs or government departments. 

Customers are embracing AI, investing in greater computing power, strengthening cybersecurity and adopting software to stay competitive.

The next 12 months present an additional catalyst. Many of the laptops bought during the pandemic five years ago are due for replacement and Microsoft’s decision to end Windows 10 support this October should spark a broad refresh cycle.

With a capital‑light model, strong cash generation and no debt, Softcat combines resilience with exposure to one of the few areas of the UK market where growth remains durable.

3. And what if you had to pick a company listed outside the UK for the next decade. What would it be?

One area where we continue to find resilient income ideas is the UK real estate investment trust (REIT) sector. It has seen a wave of M&A (mergers and acquisitions) activity this year, driven by discounted valuations. 

For example, we owned Assura, the healthcare REIT, which was recently acquired by Primary Health Properties. It feels like the whole sector is ‘up for sale’.

Within the Investment Trust, we allocate part of the portfolio to high-yielding companies where we have strong conviction in the sustainability of their dividends. 

One such holding is LondonMetric, a large and diversified real estate company with exposure to logistics, convenience retail, healthcare and entertainment. 

It’s a business that combines attractive income with long-term structural growth themes.

4. What sector would you be avoiding and why?

We avoid sectors with high sustainability risks and companies with poor governance and human rights practices. 

For example, we do not invest in tobacco, given the clear health impacts of the product. 

More broadly, we believe that businesses exposed to these risks face long‑term structural headwinds, whether from regulation, litigation, or shifting consumer preferences. 

These factors can make them more volatile and less reliable as long‑term investments.

5. Do you think the UK market is cheap?

The UK market has had a strong run, so it’s not as cheap as it was. The FTSE 100 has delivered a 15 per cent annualised total return over the past three years, and it has even outpaced the S&P 500 over the last year. 

But despite that rally, the FTSE All-Share still trades at around 13x earnings, a discount to most other global markets.

I think investors will benefit from being selective. The FTSE 100’s outperformance has been driven by a narrow group of sectors: banks, aerospace and defence, and tobacco. 

Those areas have re‑rated strongly. Meanwhile, UK domestic companies have lagged, reflecting investor caution around the UK’s growth outlook, inflation pressures and fiscal risks.

We see many attractive opportunities in the UK mid‑cap segment and among high‑quality companies that have been left behind in the rally. 

Businesses like Genuit, which produces sustainable plastic piping for construction and residential buildings, or Experian, a global leader in data and credit analytics, have outlooks that we believe are underappreciated by the market.

6. One of your biggest holdings is National Grid? Why?

We have entered a new era for energy demand. After years of flat or declining electricity use, demand in the UK and US is now set to rise, driven by data centres, electric vehicles and low‑carbon heating. Yet much of the existing grid infrastructure is ageing and inefficient.

National Grid sits at the heart of this transformation. The company is ramping up investment to strengthen grid resilience in the US and deliver major transmission projects in the UK, including connecting offshore wind in Scotland to key consumption centres in England. 

This underpins strong real asset growth beyond 2030, supported by a strong balance sheet. With a dividend yield of 4.4 per cent, a healthy premium to the wider market, National Grid offers a rare blend of stability today and long‑term growth tomorrow.

Should investors be looking to rebalance their portfolios away from the US at the moment?

I would not say investors should abandon the US – it is home to some of the world’s most innovative companies – but they should be aware of how concentrated the US market has become.

The so‑called ‘Magnificent Seven’ now make up around a third of the S&P 500. If, for example, 70 per cent of your pension is invested in the US, mostly through passive index funds, that means nearly a quarter of your pension is tied up in just seven companies, all geared into one theme: artificial intelligence.

I am not sure most investors fully appreciate that level of concentration risk. For me, the answer is not to walk away from the US, but to be more selective and to focus on diversification. 

There are plenty of opportunities outside these mega caps, and outside the US, but you need to look beyond the obvious.

What company could become the next Nvidia?

Yes, we own one in the Dunedin Income Growth Investment Trust. It may not be a household name yet, but ASML is an irreplaceable enabler of the AI boom due to its critical role in the semiconductor supply chain. 

Quite simply, Nvidia could not manufacture its chips without ASML’s lithography machines.

ASML builds incredibly complex machines that cost over $200 million each and take months to assemble. 

Its dominant market position and leadership in advanced technology give it pricing power that rivals Nvidia’s. 

The journey has not been without bumps – geopolitical headwinds and shifting customer demand have led to volatility – but the long‑term outlook remains positive. 

What’s better in your view, active or passive investing?

Passive investing has delivered clear benefits including low fees, convenience and, in recent years, decent performance versus many active strategies. But as we always say, past performance does not predict future returns.

The dominance of passive flows in the US and UK has inflated valuations of the largest companies, which carry the heaviest index weights.

In the UK, active funds, particularly those invested in small and mid-cap businesses, have seen outflows, while passive indexes have gained. 

This has helped the FTSE 100 rise nearly 20 per cent this year, versus less than 10 per cent for the FTSE 250.

We believe active management is vital to exploit market inefficiencies and uncover mispriced opportunities.

Why should investors choose your fund over a passive index fund?

There are three reasons. 

First, quality at a discount. The Trust offers a portfolio of high‑quality companies currently trading at a historic low premium to the market. 

While quality has outperformed over the long term, it has been out of favour in recent years – a trend we believe is set to reverse. 

Second, an attractive income. We offer a 6.5 per cent dividend yield on the share price, backed by a 43‑year record of growing or maintaining its dividend. 

That’s a testament to the resilience of the investment trust structure. Compelling entry point: investors can currently buy shares at a high single‑digit discount to the underlying portfolio NAV. 

This ‘double discount’ – quality companies at attractive valuations, plus the trust’s own discount – represents a compelling opportunity. 

Should gold form part of everyone’s portfolio?

This question comes as the gold price passed $4,000/oz, up over 50 per cent year to date – a move that has surprised many market commentators. 

We believe gold is an attractive diversifier amid heightened political risks.

What about bitcoin or other crypto currencies?

The bigger question lies in the future of tokenisation – the recording and transacting of financial assets such as bank deposits, funds and private investments on the blockchain. 

While the technology promises benefits like faster settlement and greater transparency, its long‑term success will depend on the breadth and depth of real‑world use cases.

Is the property market ‘safe as houses’ or due a crash?

The recent UK housing market downturn has been unusual. Activity has slowed, and the UK is still building fewer houses than before Covid, yet house prices remain surprisingly resilient. That reflects the chronic undersupply of homes and improved mortgage affordability.

The biggest issue right now is confidence, not affordability. Buyers and sellers have been cautious, waiting for more clarity on the economic outlook.

Encouragingly, there are signs of improvement. I spoke with the CEO of a FTSE 100 housebuilder this week who noted that the planning system is beginning to loosen, with land availability improving. We have not seen this for some time.

The listed housebuilding sector is not priced for a recovery, but once confidence returns – perhaps after the November Budget – we could see volumes pick up.

If you were chancellor what tax would you increase to plug the fiscal black hole?

Designing tax rises that raise revenue without undermining growth or adding unnecessary complexity is a challenge for any Chancellor. 

The largest levers – National Insurance, income tax and VAT – carry economic and welfare consequences.

Instead, I would look to tackle inefficiencies in the system. One example: reducing the tax‑free cash Isa allowance. 

While not a huge revenue raiser, it would encourage a shift in savings behaviour.

UK adults hold only around 8 per cent of their wealth in equities and mutual funds outside pensions – the lowest level in the G7. By contrast, US households allocate about 33 per cent. 

Redirecting more savings into equities would not only strengthen UK capital markets but also improve long‑term household wealth outcomes.

Which company would you advise an income seeking investor to put £100,000 in?

It really depends on your financial circumstances, risk tolerance and investing time horizon. 

For most investors, I would suggest seeking diversification through investments in funds or investment trusts which can provide access to a broader range of income-generating assets and help manage risk.