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Searching for income - October 2013



    UK equity income has provided one of the more reliable sources of income for the needy investor, and it is typically the larger, more bankable companies that deliver the best payments.

    The downside however is when a fund buys into big dividend payers, such as BP, and the company runs into trouble that problems can arise.

    There is also the issue of the star system with active fund management - not all companies have a sole player making the decisions or becoming the figurehead, but the largest funds in the business, Invesco Perpetual Income and High Income have Neil Woodford, who recently announced his departure and this has, predictably caused a lot of angst in the investment community.

    Other income-yielding assets are available for clients, notably fixed income and investment trusts. There has been a great deal of uncertainty with corporate bonds, and some experts have suggested turning to high-yield bonds which have more of a correlation with US equities than the conventional corporates.

    Investment trusts have shown promise as well, as they pay dividends but are not bound by the strict rules of conventional equities. Altogether, investors have many types of assets to choose from when looking for income; it is important their adviser is well informed to guide them in the right direction.

    Hal Austin is editor of Financial Adviser

    In this special report


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. According to Daniel Liberto, how much money was Neil Woodford managing ?

    2. According to Daniel Liberto, what proportion of total assets under management did the top 15 funds in the UK equity income sector account for?

    3. According to Robert Davis, Russia is pressurising companies to increase dividends to what percentage of earnings?

    4. According to Simon Crinage, many commercial property trusts are now trading at a premium to net asset value. True or False

    5. According to John Sullivan what accelerated the growth of high yield bonds in the 1990s?

    6. According to John Sullivan what will be the size of the European high yield debt market in 2015?

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