Stocks or bonds for income? Why not have both
Whilst many investors have had dividend stocks and bonds in their portfolios over the journey, having them both in a single vehicle is a fresh take.
That's what the WAM Income Maximiser does (ASX: WMX). It invests in high-quality Australian companies, as well as debt instruments (bonds).
So, why has Wilson Asset Management built such a strategy? According to Portfolio Strategist Damien Boey, there are three reasons:
- "We are living in a world where inflation is a bit higher than normal, so we do think that people want to have an income that is suitable after inflation".
- "Our shareholders overwhelmingly wanted a monthly income product, so we decided to meet that need."
- "The hybrid securities that are issued by banks. They are essentially debt securities that banks issue, but are convertible into equity under certain triggers. The Prudential regulatory authority has essentially phased them out. So a lot of people are therefore looking for a replacement or an enhancement on that sort of product."
Whilst those are the functional reasons, there's also the fact that the world has "gone very growthy in terms of equity", adds Boey.
By that, he means technology stocks and similar ilk that offer you a payout in the very long term, but not necessarily in the short term.
"So we decided to create a product that we think goes against that trend, so that we can offer some diversification, just in case that trend were to unwind", said Boey.
To learn more about the WAM Income Maximiser, make sure to watch the video above or read a summary of the interview below.

INTERVIEW SUMMARY
One vehicle, two levers: Why blending equity and debt matters
What makes WMX stand out, Boey says, is its structure. It's the only listed investment company (LIC) in Australia that actively invests across both equities and debt instruments.
“The listed investment company can do two things,” Boey explained. “Firstly, it has the ability to smooth the earnings to be able to convert that into a dividend. And then secondly, it has the ability to generate its own franking.”
Crucially, the dual focus on equities and debt offers something most high-yield equity funds don’t: flexibility.
“If you're a high dividend yield investor, you're typically investing in companies that are cheap – and often they're cheap for a reason. It can take a while before they actually recover,” Boey said.
Rather than getting stuck in so-called ‘value traps,’ WMX can lean on its bond allocation to support income needs, while giving the equity sleeve more freedom to pursue capital growth opportunities.
“We want to be able to generate the higher-than-average income, but we want to flex the debt side of the portfolio to do that, which in turn frees up the equity portfolio to pursue those opportunities for capital growth where they arise".
The macro challenge: Navigating a distorted environment
WMX targets a yield of the RBA cash rate plus 2.5%. To do that sustainably, Boey says investors must understand the unique and distorted environment we’re currently in.
“We are in a world characterised by incredibly high correlation between government bonds and stocks,” Boey said.
“If interest rates go down, bonds rally… and stocks tend to go with them.”
That’s a major departure from historical norms – and it creates serious problems for traditional passive strategies, which rely on uncorrelated assets to balance risk.
“You lose that diversification benefit,” Boey said. “Basically, you are saying, ‘I think interest rates will fall to make the market go up’ – and the way you would express that is through a really bullish view on the right sorts of equities, not government bonds.”
Boey also highlighted the presence of strange pricing signals in bond markets – like persistently negative swap spreads – which are often a function of excess leverage and the central banks’ reluctance to let funding markets fail.
“All of that means distorted bond pricing,” he said, “and it makes it very hard to see how financial conditions are going to tighten enough to sustainably bring inflation down.”
That, Boey says, is why active management and adaptability are vital.
The tools to adapt: Active levers for income and growth
To deal with this complexity, WMX is highly active across four key levers:
- Duration management: “We can go longer or shorter duration, fixed or floating rate".
- Credit quality adjustment: “We might take on higher-yielding corporate credit if it’s a risk-on environment".
- Dynamic asset allocation: “We can swing between debt and equities depending on what we’re seeing".
- Equity style tilts: “We can reweight by sector, style, or geography – especially in such a crowded investment space".
This flexibility is anchored to a 60/40 equity-debt benchmark, but Boey stresses it’s not static.
“We can technically max the weights between zero and 100 on either side,” he said. “Typically, we’ll move around 10–15% either way, but it’s all about pursuing maximum return within each sleeve before we wholesale shift the mix.”
A core income diversifier – with an eye on total return
So where does WMX fit within a broader portfolio? Boey is clear on that.
“What we want to be able to do is provide that longer-term diversification for shareholders while providing the income,” he said. “The two go hand in hand.”
Importantly, WMX doesn’t sacrifice capital growth in the pursuit of yield. “We don’t want to be so blind to just investing in income that we leave growth on the table,” Boey added.
Ultimately, WMX is built to generate reliable income in an uncertain world, with the flexibility to pivot between opportunity and protection.
“It’s a vehicle that can play the short-term continuation of recent themes,” Boey concluded, “but also position against unwinds of them for the longer term.”
A perfect combination of income and growth
WAM Income Maximiser (ASX: WMX) aims to provide monthly franked dividends and capital growth to shareholders by investing in Australia’s highest quality companies and corporate debt instruments. To learn more, visit the Wilson Asset Management website.
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