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INCOME INVESTING: FACTORS TO WATCH
Choices will depend on:
To target their incom e goals, individual investors have different choices, such as cash deposits, bonds or income funds.
INFLATION
UNCERTAINTY
INCOME POTENTIAL
The higher the inflation the higher their income needs on a monthly basis
With high uncertainty investors tend to park their funds in bank deposits
Higher income from cash deposits may lead to little appetite to seek alternative income sources
INFLATION ABOVE CENTRAL BANK TARGETS
Investing for income will become a top priority for investors in the current economic and financial market backdrop.
Eurozone
Dec 2022
Vs 5.0% in Dec 2021
9.2%
THE FOUR KEY DRIVERS OF INFLATION
The Russia-Ukraine war has exacerbated pre-existing inflationary pressures, by contributing to sustained price hikes, especially for commodities.
Geo-politics fuel inflation
Still robust consumption, strong labour markets in the US and persistent supply chains pressures would keep inflation above central bank targets.
Supply side pressures
While consumer demand and labour markets are strong, we remain aware of the potentially self-fulfilling wage-inflation loop
Psychological dimension is starting to kick in
Limited renewable energy production capacity and high commodities demand will lead to an increase in related energy and commodity prices.
Structural factors: the greenflation
USA
Dec 2022
Eurostat
Vs 7.0% in Dec 2021
6.5%
UK
Dec 2022
Vs 5.4% in Dec 2021
10.5%
Switzerland
Dec 2022
Vs 1.5% in Dec 2021
2.8%
China
Dec 2022
Vs 1.5% in Dec 2021
1.8%
FIGHTING THE EFFECTS OF INFLATION
If inflation stays high, income portfolios risk losing money. The longer the time horizon, the stronger this risk becomes.
HYPOTHETICAL WEALTH PROJECTIONS OF A €100,000 DE-CUMULATION
PORTFOLIO; €3,000 ANNUAL WITHDRAWAL AND NO CAPITAL APPRECIATION
THE LONGER THE TIME HORIZON, THE HIGHER THE RISK
Portfolio Wealth €
To compensate, investors can look to supplement their portfolios with additional income.
Different strategies cater to different needs
Making more by losing less
First Eagle Amundi Income Builder Fund
Fund Page
A yield-seeking response to rising inflation
Amundi Funds Real Assets Target Income
Fund Page
From benchmark investing to an outcome oriented solution
Amundi Funds Pioneer Income Opportunities
Fund Page
Offering new sources of alpha in the infrastructure asset class
KBI Global Sustainable Infrastructure Fund
Fund Page
Important and Legal Information
Source: Unless otherwise stated, all information is from Amundi and Amundi Institute as at July 2023. Views expressed are at the time of writing and are subject to change without prior notice. This is a marketing communication is a marketing communication about Amundi Funds – Amundi Funds Real Assets Target Income, First Eagle Amundi – First Eagle Amundi Income Builder Fund, and KBI Funds ICAV – KBI Global Sustainable Infrastructure Fund (collectively, “Funds”). Amundi Luxembourg S.A. is the management company and Amundi Singapore Limited (Registration No. 198900774E) the Singapore Representative of the Funds. Amundi Singapore Limited is regulated by the Monetary Authority of Singapore. This advertisement is intended for general circulation without taking into account the specific investment objectives, financial situation or particular needs of any particular investor. An investor may wish to seek advice from a financial adviser regarding the suitability of the Funds before making a commitment to purchase units in the Funds. Investments in the Funds carry investment risks, including the possible loss of the principal amount invested. Such activities may not be suitable for everyone. Value of the shares in the Funds and the income accruing to the shares, if any, may fall or rise. It is the responsibility of investors to read the legal documents in force. Investors should read the Singapore Prospectus and the Product Highlights Sheet of the Funds (collectively, the “Offering Documents”) before deciding to invest. Subscriptions in the Funds will only be accepted on the basis of the latest Offering Documents of the Funds available in English. A summary of information about investors’ rights and collective redress mechanisms and sustainability-related aspects of the Funds can be found in English on the regulatory page at https://about.amundi.com/Metanav-Footer/Footer/Quick-Links/Legal-documentation. Amundi Luxembourg S.A. and its affiliated companies do not accept any liability that may arise from the use of information contained in this advertisement, and do not make any representation on the merits, suitability, expected success, or profitability of investments in the Funds. Refinitiv Lipper Fund Awards, ©2023 Refinitiv. All rights reserved. Used under license.
Source: Financial Times Global Inflation Tracker. YoY = year over year. For illustrative purposes only.
Information given is at time of writing and may change without prior notice.
For illustrative purposes only.
Above simulation assumes that the annual withdrawal rises in line with inflation, no capital appreciation and that the remaining capital increases at the income rate. Any forecast, projection or target is indicative only and is not guaranteed in any way. Amundi accepts no liability for any deviation to the forecast, projection or target. For illustrative purposes only.
A yield-seeking response to rising inflation
Amundi Funds Real Assets Target Income
Fund Page
Above simulation assumes that the annual withdrawal rises in line with inflation, no capital appreciation and that the remaining capital increases at the income rate. Any forecast, projection or target is indicative only and is not guaranteed in any way. Amundi accepts no liability for any deviation to the forecast, projection or target. For illustrative purposes only.