Investing for income

Seeking a regular income from your investments

There are lots of reasons why investors might seek an income stream from their investments; for example, to pay for a dependant’s education, supplement a pension, or fund the cost of care.

If you require regular income you can invest in a Fund that pays out Dividends from equities or interest from bonds, rather than have your returns invested back into the Fund. Typically, Income Funds pay out twice a year but this can vary so it’s important to check the literature on individual Funds. You also need to be aware that income payments can go down as well as up.

Things to remember about investing for income:

  • When buying a Fund for income you should purchase income units (or share classes), rather than accumulation units (or share classes)
  • You can assess how much income a Fund might generate by looking at its yield. This is a measure of income as a percentage of the value of the Fund, but the amount is not guaranteed and you should take care when comparing yields of different Funds
  • Equity Funds quote a historic yield figure usually covering the previous 12 months up to the last Dividend declaration date and based on the Fund price at that date
  • Bond Funds, on the other hand, quote a distribution yield which reflects the amount that the Fund may distribute over the next twelve months (although these figures are not guaranteed and may change) as a percentage of the share price of the Fund on the last working day of the previous month
  • To find Fund sectors that aim to generate income see the IA sector diagram. To explore how different Funds compare in style and performance use our : explore tool.

Our shortlist of featured Income Funds

To assist you, below is a shortlist of Funds for your consideration compiled by independent research partner Square Mile. They work closely with us to filter down the Funds available into a focused list of high quality Funds for our investors.

Fund Name IA Sector Square Mile Rating FE Crown Rating FE Risk Score Link
Aviva UK Equity Income UK Equity Income Square Mile A Crown Rating 4
84
Fund Details
AXA Sterling Credit Short Duration Bond Sterling Corporate Bond Square Mile A Crown Rating 2
9
Fund Details
Baillie Gifford Strategic Bond Sterling Strategic Bond Square Mile A Crown Rating 3
40
Fund Details
First State Investments Global Listed Infrastructure Global Square Mile AA Crown Rating 5
80
Fund Details
Janus Henderson Global Equity Income Global Equity Income Square Mile A Crown Rating 2
98
Fund Details
Schroder Income Maximiser UK Equity Income Square Mile A Crown Rating 2
90
Fund Details

When selecting an income generating Fund make sure you opt for the income units and that the yield quoted is sufficient for your needs.


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