Barbell investing set to make a comeback

equity income

While high yield strategies did well during the bear market, the current environment looks better suited to a more balanced approach that focuses on maximising dividend growth at the expense of high yield

There are around 90 funds in the IMA UK Equity Income sector, all with the basic objective of producing a yield of at least 110% of that available from the FTSE All-Share index. However within this group there are a variety of processes employed. Two of the key techniques we have identified are the "high yield" strategy and a "barbell' approach. In the high yield approach, the fund has a strictly observed minimum yield target for each stock, while those adopting barbell attempt to capture income and growth opportunities using both high and low yield stocks in the portfolio. Successful e...