Monthly income suggestions - Switching from Invesco Monthly Income Plus

Catbells

Which is the best fund to switch to for monthly income?  I have had the Invesco Monthly Income Plus for quite a few years but now want to move my money from it since it is consistently underperforming.   Thanks. 

LHW99

What do you mean by best?

Income funds are unlikely to provide much capital growth (although it is quite possible for them to provide some growth, depending on what they actually hold). Their purpose is to maintain a moderately steady annual income.

The Invesco fund has a lot of bonds, which had a big drop last year, and has a relatively high yield.

You could look at:

Jupiter Alternative Monthly Incom GB00B4M78461 

Axa Monthly Income GB00B7MMK577

CT Threadneedle Monthly Income GB00B8BZ3226

Schroder High Yield Opportunities GB00B5143284

There are others, so this is not a recommendation. You can find more on MorningStar, or Trustnet using the search.
These funds have varying yields, and varying compositions (shares vs bonds etc), but all AFAIK have OCF's less than 1%. As usual do your own research.

poseidon1

Has an alternative to funds you could also consider an Investment Trust ( UK LSE quoted investment company). My pick would be Twenty-four Select monthly income ord shares ( ticker SMIF). It specialises in bond investing primarily for fixed income.  Its a bit specialised and both HL and Interactive Investors platforms require you to be a sophisticated investor and pass their 'exam' before investing.

However, as with bond funds, its share price took a beating when bank interest rates rose sharply. 
At current share price income yield is around 8.5% ( it was nearer 6.9% when i invested a few years back) . It pays a fixed amount for 11 months with a balancing uplift amount each November.

Share price has been steadily recovering in anticipation of B o E rate falls ( up 12% in last 9 months ) so in addition to a high monthly income, for new investors there is some prospect of capital growth during the current potential downward pressure on interest rates.

I hold it in both ISA and Sipp. Tax free income is paid out monthly from ISA , but currently reinvested at SIPP level to eventually provide a natural drawdown income yield.

A further bonus holding it with HL, there is  no monthly fee for holding  since it is an ordinary share rather than fund.

Worth a look.

Linton

What makes you think Invesco monthly income is showing poor performance? Its current interest rate is around 5%. I see no sign of income in £ terms  falling, quite the reverse.

dunstonh

 I have had the Invesco Monthly Income Plus for quite a few years but now want to move my money from it since it is consistently underperforming.

Its not underperforming.  It is outperforming 

Its not a fund I would want but then I wouldn't use 20% equities and 80% bonds as my ratio for providing income.

Catbells

LHW99 said:

What do you mean by best?

Thanks.  I'm a cautious investor - I'm 72 so maybe thats why.  So I would like to be fairly confident the income will be consistent.    I have 3 other investments besides this one so I expect ups and downs but Invesco seemed to not be performing that well.  I read there were big problems with the company a few years ago but maybe they have resolved now.  The one I get best returns on is Blackrock Gold and General but I think I need to change this one too as it's the most volatile of all.  The other one which has underperformed is Schroder High Yield Opportunities Fund Z Inc.   I used to have an IFA manage this but he died so am new to managing it myself.  Coming here is part of my research!!!   Thanks very much for the names you suggested.  I am aware this is not a recommendation but when you don't know anything names are a good place to start.  

dunstonh

Thanks.  I'm a cautious investor - I'm 72 so maybe thats why. 

The fund you have is more defensive than cautious.  Cautious is usually considered closer to 40% equities.   You have just 20%.

 I have 3 other investments besides this one so I expect ups and downs but Invesco seemed to not be performing that well.

It has outperformed its benchmark and is doing well.      

Performance should be measured relative to its asset class.    Comparing a low volatility fund that has just gone through one of the worst periods in over 100 years for that asset class with an extremely high risk fund is not a way to measure performance.

The one I get best returns on is Blackrock Gold and General but I think I need to change this one too as it's the most volatile of all.  

Pretty much one of the highest-risk UT/OEIC funds you can get.

The other one which has underperformed is Schroder High Yield Opportunities Fund Z Inc.

A medium to medium high-risk fund IIRC.

Catbells

poseidon1 said:

Has an alternative to funds you could also consider an Investment Trust ( UK LSE quoted investment company). My pick would be Twenty-four Select monthly income ord shares ( ticker SMIF). It specialises in bond investing primarily for fixed income.  Its a bit specialised and both HL and Interactive Investors platforms require you to be a sophisticated investor and pass their 'exam' before investing.

However, as with bond funds, its share price took a beating when bank interest rates rose sharply. 
At current share price income yield is around 8.5% ( it was nearer 6.9% when i invested a few years back) . It pays a fixed amount for 11 months with a balancing uplift amount each November.

Share price has been steadily recovering in anticipation of B o E rate falls ( up 12% in last 9 months ) so in addition to a high monthly income, for new investors there is some prospect of capital growth during the current potential downward pressure on interest rates.

I hold it in both ISA and Sipp. Tax free income is paid out monthly from ISA , but currently reinvested at SIPP level to eventually provide a natural drawdown income yield.

A further bonus holding it with HL, there is  no monthly fee for holding  since it is an ordinary share rather than fund.

Worth a look.

Thank you Poseidon1. I am trying to understand how the market works but it's a bit daunting.  I have £58,000 in these income funds with Fidelity. I don;t rely solely on the income from them  and ever since the IFA who managed them for me died I  thought I would manage them myself.  I could put the whole package with AJB who manage my main investments but I don't want to pay them any more fees.  

Catbells

dunstonh said:

 I have had the Invesco Monthly Income Plus for quite a few years but now want to move my money from it since it is consistently underperforming.

Its not underperforming.  It is outperforming 

Its not a fund I would want but then I wouldn't use 20% equities and 80% bonds as my ratio for providing income.

Thanks - it's reassuring to know that.  
What would your spread be re equities and bonds for income portfolio?   I have 50/50 at the moment but as stated I am going to move the Blackrock one to another when I decide which one.  Got some ideas from asking here so will look at them before moving.  

Catbells

Linton said:

What makes you think Invesco monthly income is showing poor performance? Its current interest rate is around 5%. I see no sign of income in £ terms  falling, quite the reverse.

I read an article about some problems they had a few years back but it looks as though they have recovered now.  I will leave this fund alone.  Thanks.