Income question about Fidelity monthly income fund

Linton

Audaxer wrote: »

On a fund like this do the dividends grow each year like some ITs, which have a long history of increasing dividends? For example if you invested £100k and received dividends amounting to £4,400 now, would you still be receiving roughly the same amount of income in 20 years time, even although the capital value of your holding should have increased quite a bit?

The ITs have a long history of increasing dividends because they can pay whatever dividends they like, they arent restricted to paying out what they receive. So increasing dividends is a management decision which drives their investment strategy as much as a result of extremely skilful investing in high income investments. Also the yields of such ITs tend to be relatively low. There is one IT I know of (EAT- European Assets Trust) that actually invests mainly for growth but chooses to pay out a steady high dividend from its capital gains.

UTs/OEICS dont have that freedom, they must pay out what they receive or explicitly re-invest and so to provide income must invest in income generating investments. Generally and broadly speaking dividends increase over time with inflation simply because company incomes and costs rise at a similar rate with inflation and so will profits. Bond interest rates however are dependent on global interest rates and they go there own way.

To increase dividends over time with a mixed fund therefore requires that the capital value increases over time. So it is up to the fund manager to balance capital growth and income. The income funds available vary from those that maximise income at all costs whilst the capital value falls to "Growth and Income Funds" that provide a low income to ensure growth. I would put the Fidelity fund somewhere in the middle and so it seems a reasonable choice for someone seeking long term sustainable moderate income.

aajax42

bowlhead99 wrote: »

It is more the other way around. The Trustnet database, like Morningstar, is a big database with lots of fund data.

Fidelity offer the N class (which has a 0.25% lower management fee) to customers who are coming to them direct on their own platform; they will after all be earning platform fees from them. The Fundsnetwork platform (which Fidelity own) carries this class. If you are with Cavendish you have a cheaper route onto Fundsnetwork than going direct to Fidelity's own branded retail front end but you would still find the N class listed alongside the Y - so assuming they let you buy it, rather than just listing it, it would be the one to get.

Is this the one you refer to? - 'Fidelity Multi Asset Income Fund N-Income' or 'Fidelity Multi Asset Income Fund N-Income Gross' ?