Investec’s King: Income is overplayed

Investec’s Max King says investors have become too fixated on income generation at the expense of capital growth.

The co-manger of the £200m Multi-Asset Protector fund says managers should focus more on companies with growing yields than those with high yields.

"Income has become overplayed; investors have given up on capital," he says.

"Investors should want stocks with steady and growing dividends; companies which have strong cashflows which they do not throw away on stupid acquisitions.

"The best income managers are those who spurn high yield and invest in good and growing yields."

King also warns there is a danger the industry is spending too much time thinking about the historic economic environment, rather than the the future.

"I admit Investec's performance in 2008 was poor, but we have had a much better year in 2009 and this year, and are recouping those losses," he says.

"But there is a danger people spend all this time looking at 2008 without looking forward.

"It is time to say we have learned the lessons of the past and ask how are we going to make money in future.

"Protecting people's money may not be good enough if you have to deliver returns. There is a limited amount of alpha in the market so we are all going to need some beta," he adds.