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How to generate a monthly income from your investments

7 August 2017

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

For most investors, income received from financial markets feels entirely removed from that of being paid a salary. Having become accustomed to regular payments during successful careers, investors suddenly find themselves in the confusing world of investment income.

First there is the terminology; concepts like “ex-dividend” and “coupon”. Then, there is the decision of where to invest, conscious not to put all your eggs in one basket. And finally, there is the long process of working out when each of these investments is due to actually pay their income.

Of 2666 funds in the marketplace, a mere 122 produce monthly payments for their investors.

Why can’t it be simpler?

It need not be that tricky, and to help, our sister company HL Fund Managers manage a number of funds which aim to make the search for income as simple as possible.

Our HL Multi-Manager Funds pay investors income at the end of each month, providing them with 11 equal income payments plus a final balancing payment in October, which distributes all the income collected by the fund, but not yet paid out. The managers aim for this balancing payment to be larger than the regular monthlies, although it is not guaranteed.

Find out more about HL Multi-Manager High Income

Find out more about HL Multi-Manager Income & Growth

Find out more about HL Multi-Manager Equity & Bond

How does monthly income work in practice?

Our fund managers are meticulous when selecting investments for income, given there are no guarantees. It is important to remember income can fall as well as rise.

To overcome many of the challenges of generating monthly payments, the HL Multi-Manager Funds hold a range of assets to avoid over-reliance on only a few. They hold enough high-yielding investments to generate a decent income now, but also some investments with the potential to offer future income growth. And they are constantly reviewed and rotated into different areas of the market when necessary, because the right mix of investments today won’t necessarily be right in future.

Importantly, the fund managers forecast and smooth the income received from each investment. Using dividend forecasting models, the Multi-Manager Funds channel intermittent income payments into twelve, regular payments for investors.

As an example, below is an illustration of the income payments investors in HL Multi-Manager High Income have received over the past year. This is assuming a £50,000 investment in June 2016.

HL Multi-Manager High Income

Income is variable and not reliable indicator of future returns. Source: Lipper IM 01/07/2016 to 30/06/2017.

Find out more about HL Multi-Manager High Income

Contrast this with two funds, both of which are held in HL Multi-Manager High Income. Jupiter Strategic Bond and JO Hambro UK Equity Income make up just under 18% of the HL fund and both are considered core holdings by fund managers Lee Gardhouse and Ellen Powley.

JO Hambro UK Equity Income invests in out-of-favour areas of the UK stock market, while Jupiter Strategic Bond seeks out opportunities across the fixed income world. Using the same example as before, a £50,000 investment in these funds in June 2016 would have produced the following income stream.

Jupiter Strategic Bond

Income will vary and is not a reliable indicator of future returns. Source: Lipper IM 01/07/2016 to 30/06/2017.

JO Hambro UK Equity Income

Income will vary and is not a reliable indicator of future returns. Source: Lipper IM 01/07/2016 to 30/06/2017.

In totality, all 3 funds produced over £2,000 worth of income throughout the year. Yet, month by month, the income received by investors varies dramatically, and this is one reason why we believe the higher charge associated with Multi-Manager Funds is justified. Please remember the value of investments will fall as well as rise, so investors could get back less than they invest.

For investors who value monthly payments, and the comfort of knowing a team of experts is objectively monitoring the funds at all times, we believe an HL Multi-Manager Fund could make for an excellent core holding.

Three HL Multi-Manager Fund options available to investors looking for an attractive monthly income are shown below.

HL Multi-Manager High Income looks to blend different types of funds from areas that provide the most attractive and sustainable yields. Managed by Lee Gardhouse and Ellen Powley, the fund aims to provide a high monthly income which can grow over the long term.

Find out more, including performance and charges

HL Multi-Manager Income & Growth blends a selection of our favourite equity income funds into a single, convenient investment. Also managed by Lee Gardhouse and Ellen Powley, they include fund managers with differing styles to form a diversified fund which aims to deliver excellent long-term returns and reliable monthly income payments.

Find out more, including performance and charges

HL Multi-Manager Equity & Bond offers exposure to a variety of assets in a single investment, with the overall aim of delivering attractive long-term returns through monthly income payments and capital growth.

Find out more, including performance and charges

Alternatively, other funds to consider for income can be found in our Wealth 150+ list compiled by our research team.

This article is not personal advice. If you are at all unsure whether any investment is suitable for your circumstances, you should seek advice. We have an award-winning team of Financial Advisers who can help you ensure your money is best placed to meet your financial goals. Our flexible approach means you only pay for the level of help you need, find out more here.

Annual percentage growth
July 12 -
July 13
July 13 -
July 14
July 14 -
July 15
July 15 -
July 16
July 16 -
July 17
HL Multi-Manager High Income N/A N/A N/A N/A 11.61
JOHCM UK Equity Income N/A 9.65 7.69 -5.02 26.48
Jupiter Strategic Bond 9.52 8.48 2.13 5.02 4.52

Past performance is not a guide to the future. Source: Lipper IM to 31 July 2017. N/A= fund data is not available.

Please note all funds, except Jupiter Strategic Bond take their charges from capital which can increase the yield but reduce the potential for capital growth. JO Hambro UK Equity Income also has a performance fee.

HL Multi-Manager High Income Key Features

HL Multi-Manager Income & Growth Key Features

HL Multi-Manager Equity & Bond Key Features

JO Hambro UK Equity Income Key Investor Information Document

Jupiter Strategic Bond Key Investor Information Document

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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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