Talking Point  

Building a diversified income portfolio

  • Explain how bonds have performed over the years
  • Explain the challenges with diversification
  • Identify ways to build a diversified income portfolio
CPD
Approx.30min
 Building a diversified income portfolio
How to navigate an ultra-low yield environment while trying to build a diversified income portfolio
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The current state of government bonds has created many problems for investors.

Advisers putting together income portfolios for clients have faced the challenge in recent years of the yields on government bonds being at record lows, while many of the stocks that have been staples of equity income portfolios for decades, such as the big oil companies, may be structurally challenged in the world after the pandemic

So what levers can advisers now pull on to enable them to build a diversified income portfolio?

This report aims to address this question indepth. It is worth 30 minutes of CPD.    

david.thorpe@ft.com

CPD
Approx.30min

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. True or false. David Jane, who runs a range of four multi-asset funds at Premier Miton, says he continues to own some government bonds, with a short date to maturity, for these diversification benefits?

  2. What is one of the problems that has occurred for those who have turned to equities to make up any income shortfall?

  3. True or false, Stephen Hay says that with any bonds rising in value (when a bond yield falls that means the price is rising) many investors have started to view bonds as an asset to own for capital gains, and equities as an asset to own for income, inverting the traditional asset allocation mix?

  4. Darius McDermott says he has sharply reduced the long-term bond allocations in his income funds, and instead has added:

  5. Why is Darius McDermott increasingly looking to investment trusts for income?

  6. Why does Chris Hiorns say he is keen on the investment case for infrastructure assets?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Explain how bonds have performed over the years
  • Explain the challenges with diversification
  • Identify ways to build a diversified income portfolio

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