How to invest for income in the current climate

ON UK INCOME

We believe that investors are transitioning to a markedly different (but probably more ‘normal') investment environment, characterised by lower returns and greater volatility.

Investment returns rely crucially on one’s starting point and 2012 lacks growth levers. Interest rates are already low and valuations and corporate margins are above average. Austerity will be a drag on growth. Volatility is likely to be higher due to the variable pace of deleveraging and state intervention. Politicians have always tended to plan for the short term and policy initiatives therefore are more likely to address the symptoms rather than the causes of our indebtedness in our view. We believe this will create distortions, uncertainty and encourage speculative capital flows a...