1 September 2023 15 minute read
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Income strategies can offer greater levels of capital protection in periods of market stress. With inflation likely to persist for longer, a global equity income strategy can offer clients the potential of more resilient capital and income growth.

Important information
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Growth, diversification and resilience

Dividends have always been an important part of equity total returns. Paid out of cashflows, they are less volatile than earnings and can offer greater levels of capital protection in periods of market stress. Re-invested over time in a well-balanced, high-conviction portfolio, dividends can deliver a powerful compounding total return for investors and act as a hedge against inflation. 

While economic growth has held up better than expected in recent quarters, inflation remains elevated and the central bank interest-rate tightening cycle continues. Given this context, we believe an allocation to a global equity income strategy can provide clients with a more resilient capital and income profile, serving as a key holding within a diversified portfolio.

A strategy seeking the best opportunities for income growth, focusing on downside protection, predictable cashflows and durable dividends – in traditional and non-traditional income sectors – offers the potential of capital protection in falling markets and attractive income and capital growth over the long term.

Download Growth, diversification and resilience to understand:

  • Why a global equity income strategy can provide clients with more resilient capital and income growth
  • How dividends can provide diversification and act as an inflation hedge
  • The importance of a differentiated approach to sourcing income

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Our range of strategies is underpinned by a robust process designed to meet clients' objectives across capital growth and income.

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Key risks

Investment risk and currency risk

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.

Emerging markets risk

Compared to developed markets, emerging markets can have greater political instability and limited investor rights and freedoms, and their securities can carry higher equity, market, liquidity, credit and currency risk.

Equities risk

Equities can lose value rapidly, can remain at low prices indefinately, and generally involve higher risks - especially market risk - than bond or money market instruments. Bankruptcy or other financial restructuring can cause the issuer's equities to lose most or all of their value.

Hedging risk

Any measures taken to offset specific risks will generate costs (which reduce performance), could work imperfectly or not at all, and if they do work will reduce opportunities for gain. 

Illiquid securities risk

Certain assets held in the Strategy could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

Income risk

The investment objective of a Strategy is to generate income, at times this may limit opportunities for capital growth.

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Important information

THIS IS A MARKETING COMMUNICATION

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable, but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. Some data shown are hypothetical or projected and may not come to pass as stated due to changes in market conditions and are not guarantees of future outcomes. This material is not a recommendation to sell or purchase any investment.

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