Disclaimer
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
Last week we were joined by five investment trust teams for our event focussed on income, as we heard from managers pursuing a steady income stream via a diverse array of strategies. On one level, generating an income is easier than ever, with ten-year gilts offering yields of around 4% and some cash accounts available offering even more, albeit with a lock-up. But in real terms, this is actually a difficult time to be generating an income. With UK CPI hovering around double digits on a backwards-looking basis, the chances of those government bonds delivering a real return of 4% over the next 12 months are slim. While that doesn’t necessarily matter if you intend to simply spend that cash, it implies the running down of capital and a lower income, year-on-year – i.e. if you are looking for a sustainable, long-term income stream, gilts and cash are possibly as unattractive as they have ever been. All the managers we heard from manage trusts which could help with this quandary, and all the presentations are available below.
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