Equity income funds

boycie1

I am looking to transfer 25k out of my cash isa into equity income because I am in need of more income but I still want my funds to grow.
I am thinking of putting 12.5k in Artemis Income and the same amount in Newton Global higher Income. I was going to invest via HL but I have seen that Cavendish are cheaper.
Have I picked the right funds for my first income investments and is Cavendish cheaper? I already have growth funds in my portfolio.

Thanks

jimjames

Cavendish are cheaper than HL, 0.25% vs 0.45%

You may want to look at a bond fund to balance out but it really depends how much risk you are prepared to take. Remember the capital will fluctuate but you only have a loss if you sell out at a lower price. Even with the massive drop in 2009 markets are now back above where there were plus you've had dividends in that time too.

EDIT:

Just noticed this on the HL site, the sum shown is virtually identical to yours. You could still buy via Cavendish.

http://www.hl.co.uk/news/articles/income-investing-receive-1000-per-annum-tax-free-from-isas

Obviously not a recommendation but could be an example to work from.

boycie1

Thanks Jim
I think that mix of funds is what I'm looking for but Cavendish does not offer the Royal London Stirling bond. Can you suggest a good alternative to this bond?

Lokolo

https://www.charles-stanley-direct.co.uk/

Same cost as Cavendish.

bowlhead99

boycie1 wrote: »

Thanks Jim
I think that mix of funds is what I'm looking for but Cavendish does not offer the Royal London Stirling bond. Can you suggest a good alternative to this bond?

For a high yield bond fund I've been very happy with Kames High Yield. Looking at the typical "5 year performance"charts you would think the RL fund was better as it has done 160% in that time, while Kames 'only' did 120%. However, the RL fund is more aggressive which meant it had tanked over 40% in the two years to April 2009 -similar to an equity fund- while other funds fared better. Running the chart from Apr 07 instead, Kames is up over 60% while RL's return is below 50%.

Come to think of it, if you're unsure where markets are moving and are not chasing yield at costs, M&G Optimal Income is an example of a fund that has a remit to invest strategically across bond types. Though it seems to be blown away by RL in the 3-5 year charts, it's flexibility and some smart decisions meant it was able to avoid losing more than a few percent in the credit crunch and so overall it's done better than both the aforementioned high yield funds over the last 7 years.

Remember if you have funds going up in value or at least maintaining value you can sell a bit here and there to get cash out of your investment without necessarily needing a headline yield of 7%+.

The conditions that have allowed many bond funds to do so well in recent years can't really be extrapolated forward - and so I prefer to get my bond exposure through strategic funds with a wide remit. Although I do have some higher yielding assets like the Kames fund and some self-selected bonds or prefs.