Asset Allocator's Soapbox: FundQuest's Paul Kim

ASSET ALLOCATOR'S SOAPBOX

Paul Kim, director at FundQuest, tells how the Gulf of Mexico oil spill has brought to the fore two key questions regarding yields.

The search for yield continues, with interest rates generally below current inflation levels and bond yields not far off. Therefore, at 3.6%, the current FTSE 350 dividend yield provides only a slightly better yield than ten-year gilts for arguably much more added risk. So why do investors commit to either, given current inflationary levels? The recent Gulf of Mexico oil spill forced investors to reconsider, in respect of BP, the two key questions regarding yields. First, does the company have the ability to pay the dividend and second how vulnerable is the underlying equity? Not surp...