What investor challenges do the two new portfolios try to address?
We spent a lot of time speaking to advisers and it turned out they and their clients really needed more sustainable income with smoother monthly flows of income and more transparent levels of risk. So we've adopted a truly multi-asset approach to help provide diversification in the returns and in the income streams. We designed two portfolios, each with a different target level of risk, that also help to smooth the income streams during the course of the year. Our conversations with advisers highlighted the benefits of compounding income, so both solutions offer accumulation classes.
What range of assets do the portfolios contain?
They blend many different asset classes including equity, fixed income, and alternatives such as property, infrastructure, and renewables. Then within those classes, there are also different regions and styles. So looking at equity, we have truly global exposure with holdings in the UK, Europe, Japan, the US, Asia and emerging markets. But within each region, there is a blend of different styles and opportunities. Taking UK exposure as an example, within that there is large cap exposure with many companies benefitting from international earnings streams. But there is also some small cap exposure too, to take advantage of quality growth-oriented smaller companies offering attractive levels of income.
The fixed-income element blends a number of different instruments and exposures: investment grade, high yield, short duration high yield, emerging market debt exposure, and some more flexible fixed-income holdings such as strategic bond funds where managers can move portfolios around to harness opportunities they see in the current changing market environment.
Alongside all that, there's real asset exposure through private equity, infrastructure investments, and renewable energy portfolio funds. So our multi-asset approach involves not just different asset classes, but different regions, styles and exposures too.
How did your experience as a multi-asset manager help you engineer more stable income streams?
Creating more regular, smoother incomes takes a lot of work behind the scenes. You need to understand the distributions of your underlying holdings, the complexities of different instrument types, and how these can all impact your income streams. We spend a huge amount of time modelling and forecasting the income streams of all our underlying holdings so we can be more confident in the sustainability of what we are offering. My long experience in multi-asset income investing and knowledge of using different instrument types, allows me to harness different income streams wherever they may present themselves, whether that's through smart beta, derivatives, active managers, or investment trusts. My experience helps me to use the most appropriate instrument type for any given opportunity. On top of smoothing income, there is the job of working out how to diversify the income streams, which is crucial for income-seeking portfolios.
Click here to learn more about Helen Bradshaw's approach to diversifying income streams and creating more sustainable incomes
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This communication is issued by Quilter Investors Limited ("Quilter Investors"), Millennium Bridge House, 2 Lambeth Hill, London, England, EC4V 4AJ. Quilter Investors is registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543).
For further information and to access the KIID and prospectus for the Quilter Investors Monthly Income and Quilter Investors Monthly Income and Growth Portfolios, please visit: https://www.quilterinvestors.com.