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High-yield strategies better for income seekers

High-yield strategies better for income seekers

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By Killian Plastow ·
October 26 2016

High-yield strategies better for income seekers

High-yield equities offer better realised income than growth equities, according to new research from AXA Investment Managers' Rosenberg Equities.

Speaking at a roundtable event earlier this week, Rosenberg Equities deputy global head of research Michael Kollo said investors were increasingly looking to equity portfolios to generate an income.

"We're in this weird world where equity is the thing that's going to give us revenue income, and we know that capital of equity is jumping around, and we know that we used to rely on bonds for this kind of stuff," he said.

"Here we are going to this high-risk asset that's dependent on growth to do this."

Using historical data, Rosenberg Equities found that high-yield strategies "delivered consistently higher income" than growth strategies, as well as greater utility due to excess cash flow in the earlier years.

Additionally, despite high-yield strategies having higher capital risk in the first six months, after this point "the numbers become kind of equivalent", Mr Kollo said.

"That's because it's still an equity portfolio, the fact that it's an equity portfolio overrides everything else because equity as an asset class is amazingly volatile," he said.


Rosenberg Equities said that given the choice between the two strategies, high-yield was a better option for income seeking investors.

"In sum, our analysis suggests that a higher yield, lower dividend growth strategy provides a superior delivered income experience with equivalent risk for investors," the company said.

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