seeking reliability in an uncertain world
For all of us, these are unprecedented times. For those investing for income, these times also bring additional challenges – market volatility and less reliability on traditional dividend payouts are making it harder to plan for the future. Many clients are spending more of their lifetime in retirement, so they also need to be able to plan and rely on their investment income for longer.
Why income?
Monthly Income Portfolios
Risk
targeted
global yield capture
smoothed monthly income
active core with passive and smart beta
The Quilter Investors Monthly Income Portfolios focus on finding long-term, reliable sources of income from across a diverse range of investments to help address these issues and reduce some of the uncertainty. Read on to find out more.
A key advantage of a diversified multi-asset solution is that it can capture opportunities across many income sources through adopting these four key investment principles.
As people live longer, fuller lives, the need to fund an active retirement means investors need to rethink their income requirements. However, finding reliable sources of income has become increasingly challenging, and the pandemic has caused some companies to cut or halt their dividend payments. With ultra-low interest rates, huge monetary stimulus and higher-than-ever asset correlation, it’s necessary to look beyond the traditional sources of income such as government bonds or interest on cash.
FLEXIBLE APPROACH
How to achieve a reliable income
To maintain a risk-targeted income strategy, focused on sustainable sources of income, the Quilter Investors Monthly Income Portfolios have a diversified income stream that has exposure to different asset classes, geographies, sectors and styles. They are not tied solely to income funds – they can also explore other exciting growth areas.
The portfolios are ‘active’ at the core with ‘passive’ as a satellite option. Passive investments can include traditional index tracker funds and 'smart beta’ strategies , which can add the benefits of a particular strategy or style into the mix.
diversification
Diversifying income is essential. And it’s no longer just about bonds versus equities or different geographies. Markets today offer a very wide spectrum of asset types to choose from. The Monthly Income Portfolios, for example, can invest in areas such as alternatives and smart beta.
They can do this by using structures such as OEICs, ETFs and investment trusts, which can hold unique asset classes.
A global approach to capturing yield, including alternative asset classes that are more resilient to certain market moves, means the portfolios can provide income even in the most challenging times.
Diversification is also more than just diversifying asset classes – it’s important to be well-diversified across regions, sectors and investment styles. This allows access to different return drivers as well as varying sources of income so that the portfolios aren’t reliant on a particular area.
traditional sources
of income
diversified
sources
of income
uk equity
uk corporate bonds
uk government bonds
uk fixed income
property
us corporate bonds
japan equity
global high yield
global
strategic
bonds
us
government
bonds
European
equity
private
equity
Asia
pacific
ex-Japan
equity
emerging
market
debt
north
American
equity
alternative
income
global
equity
corporate
bonds
renewables
smart
beta
infrastructure
alternative
fixed
income
emerging
market
equity
asset class
region
sector
style
Risk targeted and managing risk
Smoothed income
Risk management is key in income portfolios as an uncertain market backdrop can encourage increased risk-taking to generate additional income. It is therefore important to invest responsibly and according to the risk profile of the end investor.
Establishing a risk level in an income portfolio reassures clients about what level of risk they are taking. Each of the two Monthly Income Portfolios has a volatility target, which indicates the level of risk the investments are exposed to. These levels are constantly monitored by the portfolio managers so that, if required, they can tactically make short-term adjustments in order to stay within the forward-looking risk parameters.
A smoothed income stream provides some predictability to investors on the income they can expect from month to month.
This is crucial for clients that need an income they can rely on, as even the highest yielding portfolio will quickly lose its usefulness if the payouts veer between extreme highs and lows every month.
By closely examining the various income streams, the team behind the portfolios can identify weaker and stronger income periods and plan the monthly distribution accordingly. Key in achieving this is an in-house income-forecasting tool that shows the income expectations for a given period.
Using the income tool, the portfolio managers can then create a portfolio that provides a smoothed income profile while factoring in everything from payment schedules to taxation and currency movements.
For illustration purposes only, the distributions from the Monthly Income Portfolios follow the financial accounting year that runs from 1 May to 30 April and is not representative of all the holdings and asset classes that the portfolios invest in.
To find out more about the Quilter Investors Monthly Income Portfolios range, please visit:
quilterinvestors.com/income/
UK: Suitable for professional clients.
IMPORTANT INFORMATION
Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.
This communication is issued by Quilter Investors Limited (“Quilter Investors”), Senator House, 85 Queen Victoria Street, London, EC4V 4AB. Quilter Investors is registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543).
Quilter Investors Monthly Income Portfolio and Quilter Investors Monthly Income and Growth Portfolio (“the Funds”) are sub-funds of Quilter Investors Multi-Asset OEIC, an investment company with variable capital incorporated in England and Wales.
Quilter Investors Multi-Asset OEIC is authorised by the Financial Conduct Authority as a non-UCITS retail scheme and can be distributed to the public in the United Kingdom.
Quilter Investors uses all reasonable skill and care in compiling the information in this communication which is accurate only on the date of this communication. You should not rely upon the information in this communication in making investment decisions. Nothing in this communication constitutes advice or personal recommendation. An investor should read the Key Investor Information Document(s) (“KIID”) before investing in any sub-fund of Quilter Investors Multi-Asset OEIC. The KIID and the prospectus can be obtained from www.quilterinvestors.com in English.
The Funds invest principally in other collective investment schemes. Your attention is drawn to the stated investment policy which is set out in the prospectus.
1
1. ‘Smart beta’ strategies, in this context, are passive fund strategies which focus on a specific set of drivers of investments returns such as dividend yields and high-quality companies, or alternative investments that may help to offset inflation risk.
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