By Jerome Bernasconi, Head Investment Content APAC, UBS Global Wealth Management
If the answer is yes, you might want to consider income investing.
Like traditional investing, income-focused investing relies on diversification and sound risk management to provide long-term performance. Where it differs is that it distinguishes between sources of returns, and aims to deliver a steady income. Returns derived from bond coupons, stock dividends, etc., rather than capital gains, are therefore preferred. Focusing on income doesn’t necessarily mean investing in asset classes with the highest yield-to-maturity; the priority is to generate relatively stable annual distributions in dollar terms. While the payouts from equity dividends and bond coupons do vary over time, any changes are gradual. Furthermore, the use of option writing within the strategy provides another means of smoothing out distributions to investors.
The CIO Multi-Asset Income (MAI) strategy can be an attractive investment solution for income-focused investors looking for a high annual payout. It targets an income payout in the 5%–7% range per year and accepts medium to high risk to achieve it; Multi-Asset Income could be appropriate for investors with a “Growth” risk profile. While aiming to achieve solid total returns through long-term capital appreciation, the solution also emphasizes diversification and proper risk management.
The new UBS Dynamic Income Fund invests along the Multi-Asset Income strategy. The fund has an income- and distribution -oriented strategy, while focusing on total returns and diversification. The fund invests dynamically in equities, Real Estate Investment Trusts (REITs) and fixed-income instruments. Investors can benefit from the capabilities of both UBS CIO Global Wealth Management and UBS Asset Management. UBS CIO Global Wealth Management provides the dynamic Income strategic asset allocation, while UBS Asset Management manages the implementation and security selection of this multi-asset portfolio.
The fund can be an attractive solution for investors who prefer receiving high and steady income to maximizing capital growth.