High Income Portfolio
This Portfolio aims to deliver 4-5%* net annual yield from a selection of 5 equally weighted underlying funds.
This portfolio aims to deliver an annual net yield of 4% to 5% from a careful selection of five equally weighted underlying funds.
At the core of the portfolio are fixed income (bond) funds that invest into government, supranational and corporate debt. These provide for a steady income stream while avoiding the capital volatility that can accompany equity (stocks and shares) funds. Each fund has been selected to be suitable as part of this portfolio or used separately on its own.
The Fidelity Extra Income fund is capable of holding government, supranational, corporate, high yield and emerging market debt.It is an unspectacular but well-diversified fund with a firm focus on generating income for its investors. This means it often has a weighting to higher-yielding (and therefore higher-risk) holdings.
The Cazenove Strategic Bond fund will also typically have a weighting to high-yielding bonds, where the fund manager’s analysis suggests that these bond issues are mispriced by the wider market. The Old Mutual Corporate Bond fund, meanwhile, mainly concentrates on bonds issued by companies with a higher credit (or ‘investment grade’) rating.
Equity exposure aims to deliver long-term capital growth together with an acceptable level of income today. The two funds selected for this portfolio provide geographic diversification while investing in the stocks and shares of companies that pay a dividend to their investors.
First of these is the Newton Global Higher Income fund, which focuses on selecting dividend-paying stocks listed in the UK and overseas (e.g. the USA, Europe and Asia). It aims to generate an attractive income yield, as well as capital growth over time.
Complementing this is the Schroder Income Maximiser fund. It invests in the shares of companies that pay a high-yielding dividend, enjoying not only the income generated from these stocks but also the potential for capital growth on the equity. The income is further enhanced through the sale of options, making the fund the highest yielding in this portfolio.
The Portfolio pays income monthly, although the payments will not be of equal value.
Chartwell view, “ With the interest rate available on cash so low at present, it's increasingly difficult to generate an acceptable level of income. Blending different high yielding asset classes together is a way to reduce risk, whilst meeting your need for income.”
*this level of return is not guaranteed,and could increase or decrease. It is calculated on a daily basis.