View more on these topics

The crash of cash

September was the 18th consecutive month that the UK bank rate has stayed at a record low of 0.5 per cent and this is likely to remain the case for some time.

This is not great news for savers who have traditionally relied on the interest from bank and building society deposits to supplement their income, with deposit rates remaining well below inflation. It may have been the plummeting equity, property and parts of the corporate bond markets that made all the headlines during the financial crisis but the crash of cash was perhaps the most significant financial event of the last couple of years.

Fortunately, there are still plenty of areas where it is possible to generate a decent income and no more so than equities, where in the UK (and some other markets), shares now yield more than government bonds. The UK equity income sector has been through a pretty torrid time itself over the last few years as a result of the banking crisis which resulted in the cutting or scrapping of dividends in that sector, followed by the disaster in the Gulf of Mexico which culminated in BP (the UK’s biggest income producer) having to suspend dividend payments.

However, the future looks much brighter for the sector, with analysts expecting BP to reinstate its dividend next year and while it will be some time before we see an increase in bank payouts, the recent results from some of the worst affected lenders have been very encouraging.

eanwhile, there are many defensive sectors of the market such as pharmaceuticals, telecoms, utilities and tobacco which continue to provide a high and, in most cases, rising income and we expect these sectors to perform well in what is likely to be a low-growth environment for many years to come.

For those who have been put off investing in direct equities (and understandably there are many who have) there are always multi-asset funds that provide income from numerous sources with the flexibility to make significant changes in asset allocation when appropriate. Within the Premier multi-asset distribution fund, we have a bias towards equities but are also finding interesting opportunities in closed-ended commercial property funds and corporate bonds where we continue to favour those funds with a decent exposure to financials and asset-backed securities.

David Hambridge is investment director pooled funds at Premier

Recommended

Advice in blunderland

There has been much publicity over the latest HM Revenue & Customs “blunder” in relation to income tax under PAYE. On the face of it, the matter of tax administration would not seem to be a subject that should be top of a financial adviser’s to do list and I would agree with that. However, […]

Prime opens PI division for intermediaries

Professional indemnity insurance broker Prime has launched a new division focused on the insurance needs of advisers. Prime IFA Solutions will provide advice on risk management and professional indemnity insurance and claims it can secure “preferential rates and exclusive offers” from insurers for IFAs. Jamie Newell, who will head the division, is joining Prime from […]

4

EU move to end gender bias in insurance policy

The Court of Justice of the European Union has edged closer to banning insurers from using gender to price insurance policies. The Association of British Insurers is currently poring over an opinion statement made by advocate general Juliane Kokott at the Court of Justice, which questioned whether the use of gender as a risk factor […]

Auto enrolment – so far so good?

Jamie Clark – Business Development Manager The recent report from the Pensions Policy Institute demonstrates the sheer scale of auto-enrolment so far and what we can expect in the future. We’ve pulled out the key information to save you reading the full report. Auto enrolment in numbers Sources: Pensions Policy Institute, The Future Book: Unravelling […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com