A case for natural income

Whilst capital values have been bouncing about in recent years, the natural income distributions from FM’s income portfolio have stayed incredibly consistent. ‘Natural Income’ is the phrase we use to describe the process of producing income without disturbing the underlying investment holding. Many clients were very surprised they didn’t see a drop in income and in fact the underlying income performance during the worst COVID months, helped to encourage and remind us that pure income funds do have their place for those looking for regular investment earnings. The charts below confirm this fact.

FM Income Portfolio showing historical income payments

Each quarter we review the portfolio to check that it’s doing what we expect it to and for five years or so, we have not needed to make any significant changes. In addition, we will periodically meet with the fund management groups to get some deep dive information from those who make day-to-day investment decisions.

Our Income Portfolio is primarily used inside ISAs, however it’s also available as a General Investment Account (GIA) and although any income generated, isn’t as tax efficient as an ISA, many clients still use this route as a method to squeeze the maximise returns from their savings. If you would like details on the underlying funds or to discuss whether this is an appropriate option for you, please do call us.

By Philip Harper  |  October 2022