Finding sustainable income in an investment world turned upside down
Investment markets are currently being challenged by low global economic growth and distorted by monetary policy targeting historically low and (increasingly) negative interest rates. This has led to a reversal of expected norms, as investors have turned to stocks for income, while bonds have been a significant source of capital gains. In this topsy turvy world where income is increasingly scarce, investors—particularly retirees—are faced with the challenge of how to earn a sustainable income without placing capital at risk. Generally, the response has been to shun risk and chase low volatility, low risk, but largely low return investments. The prices of ‘high yield’ and ‘high quality’ stocks have rallied to such an extent that prudence dictates a reassessment of relative value. Finding value and sustainable income in this market is challenging, but we explore some examples to show that even in the more expensive sectors, there are opportunities to invest in stocks that offer diversified and sustainable income. (VIEW LINK)
Nikko Asset Management is one of Asia’s largest asset managers, providing high-conviction, active fund management across a range of Equity, Fixed Income, Multi-Asset and Alternative strategies. In April 2021, Yarra Capital Management acquired...