Unit trusts for income seekers

By THIS IS MONEY
Updated:

 

Older investors or those coming up to retirement often need funds that provide income as well as capital growth. Our experts give their recommendations.

Mark Dampier at Hargreaves Lansdown recommends the Artemis Strategic Bond Fund. 'Managers James Foster and Alex Ralph have been brought in from F&C to run this fund and they both have a good reputation. I like this fund because of its flexibility. 'Because it's relatively new it can move from high yield investments to gilts to other bonds if it so wishes. What sets the Strategic Bond Fund apart is the fact that it can invest in any type of bonds in any combination, choosing its holdings based on the economic cycle.'

Philippa Gee, investment director at Torquil Clark, recommends Invesco Perpetual Monthly Income Plus. 'This is a powerful fund for many investors. It holds both equities and bonds, with the equity element managed by the exceptional Neil Woodford and the bond element managed by Paul Read and Paul Causer, who are themselves one of the most talented duos in the bond world, investing in both high yielding corporate and government bonds. This fund was launched in 1999 and is now over £1.5bn in size, it should be considered for most investors seeking higher income.'

Darius McDermott, managing director of Chelsea Financial Services, recommends Schroder Income Maximiser. 'A new breed of income fund, it invests in stocks but also utilises covered call options which combined can produce a higher level of income than a traditional equity income fund. This type of fund will tend to outperform in flat markets but lag behind in strongly rising markets. The portfolio is a tight selection 30-40 high quality UK large caps.'

Anna Bowes, investment manager with AWD Chase de Vere recommends Invesco Perpetual Monthly Income Plus. 'If income is of primary importance, a fund that invests into fixed interest is likely to be pretty appropriate. But this fund is slightly different as it aims to achieve a high level of income whilst seeking to maximise total return through investing in high yielding corporate and Government bonds, together with UK Equities – up to 20% of the portfolio can be in equities, managed by the vastly experienced Neil Woodford.

'The fixed interest portfolio has been managed by Paul Causer and Paul Read since launch in February 1999, although they have a far longer history of fund management in this area. This part of the fund invests into mainly government and other bonds and fixed interest securities in any part of the world. Since its launch, the Invesco Perpetual Monthly Income Plus fund is the second best performer in the sector, providing a total return of 87% compared to the sector average of 49%.'

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