Vanguard Equity Income or Royal London Sterling Extra Yield Bond?

aroominyork

I'm setting up an income portfolio and was about to buy Vanguard Equity Income, then remembered that RL Sterling Extra Yield Bond has historically performed similarly. They are of course very differently invested but follow similar trajectories, though with the bond fund less volatile. Which would you invest in, and why?

Linton

If those were the only funds available and the income was the primary objective,  I would invest in both. They are very different funds with very different classes of underlying holdings. Investing in both gives you a much greater level of diversification, an important factor for income investors.

If income is the objective the price performance graph is relatively unimportant.  As long as the income keeps coming in why should you care about price volatility?