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View the article online at http://citywire.co.uk/wealth-manager/article/a737519

Income hunt: innovative investors turn to unconventional sources

by Eleanor Lawrie on Mar 05, 2014 at 09:51

Diversify geographically

Elsewhere, investors not comfortable investing in alternative assets could diversify their portfolio geographically, by investing in an area where negative sentiment is priced in, or a region that is not traditionally looked to for income.

Talib Sheikh, (pictured) manager of the JPMorgan Multi-Asset Income fund, thinks the key for investors looking to boost income is global diversification, which has brought him to peripheral Europe.

‘Having a global reach and thinking innovatively is important, especially when you look at what traditional assets are giving you,’ he says.

Last year, the fund upped its exposure to European peripheral debt in Italy and Spain, to create a portfolio of bonds yielding 4-4.5%, capitalising on negative perceptions.

‘The reality is if there is negative news flow in Europe, the valuations won’t be there, so you get paid for taking that risk,’ he said.

As the outlook for the troubled eurozone has improved in the last few months, Sheikh has been compelled to switch out of peripheral securities and into European equity, which is giving him a yield of around 5%.

Whether investors choose to diversify by geography or asset class, it is clear they are going to have to work harder and be more flexible in order to secure significant levels of income in their portfolios.

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1 comment so far. Why not have your say?

S McGee

Mar 08, 2014 at 08:38

.. it is this sort of desperation ... at these sorts of premiums .... that is cause for concern

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