Is chasing income 'risky and undisciplined'?

Factor concentration is an issue

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Andrew Herberts, head of private client investment management at Thomas Miller Investment
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Andrew Herberts, head of private client investment management at Thomas Miller Investment

It is almost axiomatic to say that confining oneself to the UK market means ignoring a huge global investment opportunity set. This is as true for income seekers as for any other market participant and as a result, interest in global income is growing.

However, the attraction lies not in the income generation per se, but in how the income requirement forces fund managers to develop disciplined investment processes with valuation at their heart.   For investors interested in total returns, income should be an outcome not a driver, so the interest in any income fund is the underlying methodology and discipline of the manager. Simply chasing income is undisciplined and may bring other risks, mainly concentration risk. This may manifest itself in sector concentration (as was the case in 2008-09), but really it is factor concentration th...

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