Generating an income from your portfolio

Posted on April 29, 2015 by - Investment

Narrowing the knowledge gap for investors

Record-low interest rates are rarely out of the news these days. With UK investors struggling to achieve a decent income from traditional investment sources, it might raise a few eyebrows to learn that less than half can correctly explain the term ‘income investing’.

A recent survey by J.P. Morgan Asset
Management revealed that while many investors know it’s important to generate income for their portfolios, surprisingly few know how to go about it.

Lack of knowledge
With low yields, low rates and the new pensions freedoms, the hunt for income is now more pressing – and more challenging – than ever. Yet J.P. Morgan Asset Management’s income investing survey uncovered a striking lack of knowledge on this crucial area among UK investors.

A shocking 38% of UK investors are still relying on savings accounts as a source of income, even though this leaves them struggling to achieve inflation-beating rates of return on their hard-earned cash. For many of these investors, it’s time to take a step back and weigh up how to make their money work harder for them.

Complex challenge
In today’s low-yield, low-rate world, generating a stable, attractive income in retirement is a complex challenge. With traditional sources of income no longer delivering the goods, the income opportunity set has to be broader and more global than ever before. Risk needs to be carefully managed to prevent against the potential loss of future wealth. At the same time, accessing competitive market returns to grow assets is equally as important, to ensure clients do not run out of money in the future.

Potential for clients
Multi-asset income funds tick all these boxes. Designed to deliver strong risk-adjusted returns, these specialist funds give clients the potential to build and preserve wealth, beat inflation and reduce the risk of outliving their assets.

Combining a broad range of asset classes, multi-asset funds give clients access to a level of diversification that they would struggle to achieve when investing alone. They also balance the provision of sustainable income with the management of downside risk, while keeping a close eye on capital appreciation. Most are accessible, easy to understand and come without complex and expensive guarantees. They also tend to be flexible, tax efficient and cost efficient.