Investing for Income
Also Interesting
Weekly Digest
Last month we launched a new multi-asset income sub-fund within the Momentum Harmony Portfolios, our Luxembourg UCITS fund range. We’ve seen strong demand for this strategy which reflects the low interest rate environment but also a general lack of investment options that deliver a reasonable level of income with only a modest level of risk. While many other income funds carry more underlying risk than the investors may appreciate, if they have jumped to conclusions from the income nomenclature and yield targets, we believe a wellmanaged multi asset income strategy offers a far safer and more robust solution. Whatever the level of income an investor requires they can and should derive it from a diversified portfolio spread across several asset classes. Diversification is the only ‘free lunch’ when investing; it enables one to mitigate the specific risks inherent in one asset class – be it stocks, bonds, property or any other – without having to compromise on return potential. Taking this a step further, introducing positions in asset classes with differentiated and less correlated return drivers, such as listed infrastructure or asset backed securities, can significantly enhance income potential whilst further reducing overall risk. The higher yields in such asset classes come hand in hand with less regular market liquidity, which is often a considerable risk but one that can be effectively managed by gaining exposure through listed companies or closed ended vehicles (investment trusts)
