Advisers ditch high yield bond funds for multi asset mandates, research shows

Portfolio-Bonds-Investment-Business-700x450.jpgAround 40 per cent of advisers have switched income-seeking clients from single asset to multi asset income funds over the past year, according to research by Heartwood Investment Management.

The firm says advisers are targeting “more reliable long-term income” in their decisions, with 65 per cent of advisers shunning high yield bond funds in favour of multi asset income funds.

Other asset classes that have been rejected include property (51 per cent), emerging market debt (43 per cent, UK equity income (38 per cent) and global equity income (35 per cent).

Meanwhile inflows into Heartwood’s income funds increased by more than 24 per cent in 2016 driven by advisers looking for global multi asset income funds.

The main criteria in selecting an income fund is its ability to generate a consistent monthly income, 59 per cent of advisers said, up from 55 per cent last year. The pensions freedoms have been key in driving the demand for income, 66 per cent of advisers agree.

Noland Carter, CIO at Heartwood, says: “Global multi-asset income funds are emerging as clear favourites among advisers whose clients seek a reliable, risk-adjusted return generated by a diversified range of assets.”

Jaisal Pastakia, investment manager of the Multi Asset Income range at Heartwood, adds: “The research clearly shows that advisers are not swayed by headline grabbing yields that may impact the stability of income payments in the long term.”