Income question about Fidelity monthly income fund

Linton

talexuser wrote: »

Compare performance of the Fidelity fund against Threadneedle Monthly Income, Axa Framlington Monthly Income and Premier Monthly Income over 5 years. All three have outperformed by 40-50%.

Yes because they are very different types of funds. The Fidelity fund operates in the Mixed Investment 20%-60% Equity Sector and inclues property and other types of investment. It is fairly cautious. The others are much higher up the risk scale - the Threadneedle Fund is 80% equity, the Axa Framlington Monthly Income is 100% equity, all UK, as is Premier monthly income.

If we had a repeat of the 2008 crash the Fidelity fund would be much more lightly hit than the three you list. In2007/9 the Axa fund dropped 60% and only recovered in total return in the last couple of years. If you had been drawing dividends you would still be 20% down. The Premier and Threadneedle funds dropped more around 40%. The average fund in the 20%-60% sector dropped 20%. The Fidelity fund wasnt around then so we dont know exactly how it would have fared but the average such fund should give a fair indication.

Audaxer

Linton wrote: »

Yes because they are very different types of funds. The Fidelity fund operates in the Mixed Investment 20%-60% Equity Sector and inclues property and other types of investment. It is fairly cautious. The others are much higher up the risk scale - the Threadneedle Fund is 80% equity, the Axa Framlington Monthly Income is 100% equity, all UK, as is Premier monthly income.

If we had a repeat of the 2008 crash the Fidelity fund would be much more lightly hit than the three you list. In2007/9 the Axa fund dropped 60% and only recovered in total return in the last couple of years. If you had been drawing dividends you would still be 20% down. The Premier and Threadneedle funds dropped more around 40%. The average fund in the 20%-60% sector dropped 20%. The Fidelity fund wasnt around then so we dont know exactly how it would have fared but the average such fund should give a fair indication.

Thanks Linton, I've not seen this fund talked about much on this forum previously, but it looks to me like a very good option for someone looking for regular monthly income (albeit it varies a bit month to month). Apart from the fact that it's more cautious and you may not get as much capital gains as some other funds, for a cautious investor that doesn't want to see a lot of volatility in fund value, the yield of 4.4% and target yield of 4% to 6% seems very good to me.

I'm just surprised I've not seen much about this fund before. Am I missing something here - is there a catch?

greenglide

is there a catch?

£450 million is invested in it!

The dividends have varied from £0.011240 to £0.003600 in the past year.

Funds like this may be considered as an alternative to ITs for income in the medium / long term?

bostonerimus

These income funds that distribute income will declare an annual yield and also an annual performance which is the percentage growth in value of the fund with the income reinvested. So it includes capital gains and income and it's declared after fees are taken out.

bostonerimus

talexuser wrote: »

Compare performance of the Fidelity fund against Threadneedle Monthly Income, Axa Framlington Monthly Income and Premier Monthly Income over 5 years. All three have outperformed by 40-50%.

You're comparing apples to siberian yaks.....a better comparison (maybe apples to pears) would be VLS40 Income although that has a little more in equities.

ColdIron

Audaxer wrote: »

I'm just surprised I've not seen much about this fund before. Am I missing something here - is there a catch?

No. There are many hundreds of income producing equity or mixed asset funds (not investment trusts) available but most of them are managed funds and not the passive/trackers popular on this forum

Audaxer

greenglide wrote: »

£450 million is invested in it!

The dividends have varied from £0.011240 to £0.003600 in the past year.

Thanks, the one £0.011240 dividend is considerably higher than the rest, but presumably that is the final dividend for that year as they have to distribute all income.

smjxm09

Well I have taken the plunge and put in £70,000 worth of maturing cash ISA's into it now for both my wife and I to add to our investments.

I have spent two months looking into this as my criteria was to find a fund that took in ISA's. I also wanted to earn some income now that I have retired. The fund had to be on the lower side of risk. I wanted it to be a fund of multiple funds that spread the risk in different pies and assets and I wanted it to be actively managed with reasonable charges.

The main point is that I don't want high returns as I don't want to suffer large crashes.

Audaxer

ColdIron wrote: »

No. There are many hundreds of income producing equity or mixed asset funds (not investment trusts) available but most of them are managed funds and not the passive/trackers popular on this forum

Thanks, it does seem to me initially as a good alternative for a fairly inexperienced investor as opposed to trying to pick a cautious well-diversified portfolio of ITs or funds that can produce that level of monthly income.

smjxm09

There is a good guide here that helped me decide to go for multi asset. https://www.fidelity.co.uk/investor/help/forms-literature/literature/knowing-your-income-options.page

You can put in fake info if you don't want them to know your email address as you will get a direct link to a downloadable booklet. It makes for easy reading that only takes 5 minutes to read.