10 June 2020
- Why do people invest? Often to generate an income from their assets, either now or in the future.
- How does this work in practice? One thing that’s been popular among UK individual investors has been investing in UK shares that pay higher levels of dividends. That approach has had its challenges over recent years, and especially this year with Shell and others slashing dividends. Today what it means is that the dividends in the UK market are supported by a smaller and smaller number of companies, with just 10 companies now responsible for around half of all dividends in the market.
But there are now attractive alternatives to generate similar levels of income, in particular these three ideas:
- Infrastructure Equity
- High Yield debt & Emerging Market debt
- Private debt
They also discuss
- High yield vs junk bonds, what’s in a name?
- What infrastructure companies offer
- The surge of institutional assets into private debt over recent year
- Why people often get credit risk a bit wrong and compare it to the wrong thing. It’s hard to equate risk in high yield with risk in equities
- The benefits of active management in credit
- Whether private can be successfully brought into the realm of the individual investor
- Why the categorization of funds matters, but could be unhelpful when it comes to income
- How attitudes to environmental and social factors have really changed among fixed income managers over recent years
Useful links referred to in our podcast this week
- The Disappearing Dividends Dilemma
- Other Investment Uncut episodes on behavourial investing:
- Episode 15: Investing in Private Credit with Steve Hodder
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