Low bond yields and high equity valuations mean that outcome-focused approaches could secure the regular investment income today's investor is looking for.
Achieve a better income outcome
Interest and annuity rates as well as bond yields are near record lows. At the same time, equity prices remain close to lifetime highs. So earning sufficient income without unacceptable levels of risk requires a different mindset.
Looking for greater certainty
Investors looking for regular flows of income traditionally have five main options:
- annuities or
- multi-asset income funds.
Yet bank deposits offer negligible rates of interest, while the other types of investment are scarcely much better. With most asset prices highly correlated, traditional methods of diversification may also no longer adequately mitigate risk.
Managing risk in every market
Aviva Investors employ strategies that fall into three broad categories: market, opportunistic and risk-reducing. The first captures market performance, the second looks to exploit market short-term fluctuations, and the third aims to protect the portfolio in unpredictable markets. The way these different strategies interact across various market conditions is crucial to managing a portfolio’s risk exposure and delivering regular income.
The final analysis
As the economic outlook changes, portfolios can be reassessed to refine risk exposure and remain appropriately diversified. In turn, they can produce steady performance with little correlation to equities, bonds and other traditional asset classes – irrespective of market conditions.