Income suggestions from 60K ISA

fronty

Hi, I am just reviewing my Mum's ISA, it's currently worth about £60,400 and is invested to provide a monthly income to supplement her SP and a small PP of £50/month. I check it every now and then to see how the yield is doing. I have done some switches in the past in an attempt to maintain a high yield (I aim for >6% pa) but a couple of her funds have dropped back a bit so I'm just starting to look to see if a switch into another high yield fund might be appropriate.

FYI, she withdraws 100% of the income every month, so I only invest in funds that pay out monthly, the thing I have always struggled with is how to get both the fund value and the income payments to grow, unfortunately this is probably a bit like turning lead into gold, and I'm sure if it was easy everyone would be doing it. Consequently the income payments are not keeping up with inflation, and the total value of her ISA has fallen by around 12% over the past few years.

She has also had to dip into it a couple of times to release some cash for a new car and other expenses, so that has further depressed the income stream over the past couple years.

Here's a history of the income pa over the past few years:

2019 £3,985 (estimated)
2018 £4,377
2017 £4,405
2016 £4,906
2015 £5,073
2014 £4,680
2013 £4,920
2012 £5,028
2011 £4,594

So I'm looking for ideas, ideally a fund that pays a decent monthly income, isn't too volatile and if possible has a track record of growth.

This is what her ISA is invested in at the moment (25% in each):

ASI European High Yield Bond - Gain/Loss = -3.41% - Yield = 4.64%
BNY Mellon Equity Income Booster - Gain/Loss = -15.67% - Yield = 7.75%
BNY Mellon Global High Yield Bond - Gain/Loss = -8.95% - Yield = 4.27%
UBS Global Enhanced Equity Income - Gain/Loss = -17.38% - Yield = 8.64%

It's the two bonds I am looking at, previously these both delivered excellent yields (when they were Aberdeen and Newton) but they have both now dropped below 5%.

I normally go onto the HL web site and reverse sort by yield, then check which ones are monthly and look at what they are invested in, I haven't done that yet but thought I'd ask in here if anyone's got any ideas?

Cheers,

Fronty

Linton

I do not believe you can sustainably achieve >6% income without ever needing to top up the capital. I also have a target of > 6% from my income portfolio but it is backed up by a growth portfolio. If it is of any help, the funds I hold for income are:

Schroder High Yield Opp Z Inc 17.69%
MAN GLG UK Income Prof D Inc 16.84%
Premier Global Infrastructure C Inc 15.55%
Threadneedle Emerging Market Bond Inst Inc 9.99%
Schroder Asian Income Max Z Dis 9.88%
European Assets Trust 9.32%
L&G High Income Trust I 9.29%
Princess Private Equity 7.58%
International Biotechnology Trust 3.88%

The aim is to maximise diversification as far as possible.


I would avoid funds with "booster" and "maximiser" in their name as they sacrifice total returns to achieve possibly unsustainable income.

fronty

Thanks for the suggestions, I’ll check those funds out.

neildt

What is the difference between

Linton wrote: »

MAN GLG UK Income Prof D Inc 16.84%

and MAN GLG UK INCOME INCLUSIVE - CLASS B - INCOME (GBP)

bowlhead99

neildt wrote: »

What is the difference between

MAN GLG UK Income Prof D Inc

and MAN GLG UK INCOME INCLUSIVE - CLASS B - INCOME (GBP)

The class D 'inclusive' version has a higher cost (ongoing charges of 1.65% a year) so that they can afford to give a kickback of 0.75% to the fund platform and/ or intermediary through whom you buy it. Whereas the class D / professional class simply has a lower management fee so the OCF is just 0.90 in the first place.

These days (since the FCA's platform review about 5 years ago), investment platforms rebate the kickback they receive and then charge you an explicit platform fee, rather than keeping the kickback. So you end up at 0.9% OCF either way.

Linton

neildt wrote: »

What is the difference between



and MAN GLG UK INCOME INCLUSIVE - CLASS B - INCOME (GBP)

"INCLUSIVE" appears to be the name Man GLG use for their Class A and B funds whereas the name "Professional" refers to Class C and D. Different resellers may have access to different fund classes which come with different OCFs though the underlying investments are the same.


As far as I can see the differences are small. Man's literature gives the OCF for Class A/B as significantly higher than that for C/D. However HL appear to sell both and quote the same OCFs. II only seem to have Class C/D. From the fund details it may be that Class C/D is used for 1-off purchases whereas CLASS A/B is used for regular contributions.



Anyway it doesnt seem to matter.

NedS

fronty wrote: »

It's the two bonds I am looking at, previously these both delivered excellent yields (when they were Aberdeen and Newton) but they have both now dropped below 5%.

I normally go onto the HL web site and reverse sort by yield, then check which ones are monthly and look at what they are invested in, I haven't done that yet but thought I'd ask in here if anyone's got any ideas?

Cheers,

Fronty

How about Royal London Sterling Extra Yield Bond as an alernative:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/r/royal-london-sterling-extra-yield-bond-class-y-income

fronty

NedS wrote: »

How about Royal London Sterling Extra Yield Bond as an alernative:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/r/royal-london-sterling-extra-yield-bond-class-y-income

Thanks for the suggestion, looks interesting, but would prefer something that pays out monthly, this one is quarterly.

Audaxer

fronty wrote: »

So I'm looking for ideas, ideally a fund that pays a decent monthly income, isn't too volatile and if possible has a track record of growth.

I think if you target a 6% yield you are unlikely to get a growing income or long term capital growth. I think 3.5% to 4% yields are more realistic aims for income growth and long term capital growth, and can be achieved with good equity income funds and/or Investment Trusts.

SonOf

Rather than take natural yield, could she not take a fixed regular withdrawal? That is the far more popular method as natural yield leaves you wondering what you are going to get each month.

Shanghaifuente

i agree that she should fixed regular withdrawal that will be beneficial