The London & Capital cautious income portfolio has the lowest risk profile of L&C’s three income portfolios, which aim to provide an attractive yield and spread risk by investing in various asset classes. The new portfolio was designed in response to adviser demand for a more cautious strategy than the existing higher income and income portfolios. These cater for high and medium-risk profiles respectively.
The cautious income portfolio follows the same investment process as the other two income portfolios, diversifying across bonds equities and cash. But if will do so with different weightings than the higher-risk income portfolios.
For example, the cautious income portfolio’s strategic allocation to bonds is 60 per cent, which reduces to 57 per cent for the income portfolio and 44 per cent for the higher income portfolio. The higher the risk profile, the higher the equity weighting, while cash reduces the higher up the risk spectrum a portfolio goes. At the end at March, the cautious income portfolio offered a yield of around 4.4 per cent.
L&C’s platform-based discretionary management, with its emphasis on client risk profiles, seems ideally placed given that the retail distribution review is around the corner. The firm also places IFAs at the centre of its proposition, which could help it attract more business as the RDR approaches.
The new portfolio for the most attractive level of income that can be achieved within its cautious strategy, but returns from the other income portfolios will obviously be higher as they can take more risk.