How to minimise risks in income investing

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Andrew Herberts of Thomas Miller Investment
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Andrew Herberts of Thomas Miller Investment

The market for income funds is more and more crowded, which speaks to both the underlying attraction of the asset class and the willingness of fund houses to play to that demand.

The subsequent marketing reinforces the demand, leading either to increased demand from funds pushing up the underlying assets or income funds' style drifts (or discipline breaks down).   In theory, investors should be agnostic between income and capital as a source of return. But as we are aware, the taxation environment does skew the outcome and a level of tax arbitration can favour one or other type of return depending on individual circumstances and the prevailing tax regime.   The undeniable fact that a large proportion of the FTSE 100 returns derive from dividend income (AJ Bell...

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