It has also flagged up just how many dividends were at risk, while the drop in bond and cash yields mean income investors are forced to take more risk.
Mr Lowcock says although the fall out from the crisis does not necessarily change the defensive income portfolio approach it highlights the importance of diversifying the income stream.
“And why even though yields were high, having all your income in equities is risky,” he adds.
“The most likely impact is investors reducing their exposure to UK equity income, which has always been too concentrated and has suffered because of that – with the likes of Shell cutting its dividend.
Yields on assets such as US high yield and European investment grade as well as high yield are more appealing than 12 months ago.--Tihana Ibrahimpasic“I would expect investors to take a more diversified global approach which might reduce yield but also reduce risk and volatility of income and capital.”
Looking for balance
Mike Coop, head of multi-asset portfolio management at Morningstar Investment Management Europe says striking the right balance between capital preservation, income growth and yield is key.
He adds: “The 'original sin' of income strategies is over-reaching for yield and ending up taking excessive risk.
"To [strike the right balance] requires; global research to identify the widest possible range of assets, long term valuation to assess scope for sustainable yield, growth and risk and stress testing across a wide range of economic scenarios including deep recession and rising inflation rates.”
The crisis has clearly shown that anything can happen to disrupt even the most solid dividends.
This is why Mr Lowock says investors should not only make sure the income generated is stable, secure and repeatable, but in a defensive income portfolio inflation risk should be considered.
He adds: “While you can never protect the income 100 per cent, the better quality of the dividends, the lower the risk of disruption.
“Inflation is falling at present but might well materialise down the line. Therefore it is a risk you need to consider.
This, he says, should be done through a number of assets such as inflation-linked bonds – which give a low yield, or infrastructure funds and real asset which offer a combination of inflation protection along with exposure to less volatile assets.
“Even a defensive fund could have exposure to mid and smaller companies which produce an income. In the UK these held up well as they didn’t have exposure to the oil majors.
"It’s not the riskiness of the asset class itself but the size of the exposure and how it slots into the portfolio which matters most,” Mr Lowcock adds.
While you can never protect the income 100 per cent the better quality of the dividends the lower the risk of disruption.--Adrian LowcockUS high yield
Tihana Ibrahimpasic, research analyst on multi-asset at Janus Henderson says with equities experiencing a market-wide dividend cut, making them a less reliable source of income in the near future, comparatively, fixed income may represent a more attractive proposition.
Ms Ibrahimpasic adds: “Spreads have come down since the market trough in March but remain attractive compared to history in some segments. Yields on assets such as US high yield and European investment grade as well as high yield are more appealing than 12 months ago.
“Additionally, coupons are less likely impacted given that they represent a contractual obligation and would result in a credit event if skipped, which is often a much more significant decision for company management than cutting or suspending dividends.”
For her, building a defensive income portfolio at this time would require a stronger emphasis on quality and liquidity.
She adds: “Stylistically it would be prudent to have a defensive quality tilt at the expense of having a more cyclical exposure.
“This could for example be achieved by reducing exposure to businesses with weak balance sheets and high leverage, and avoiding sectors most affected by the crisis such as travel and leisure, and energy.”
