Income is top priority for investors, say leading managers

Investors are increasingly seeking refuge in income over any other kind of investment, according to a fund manager poll by Aviva Investors.

In the latest survey carried out by the firm’s multi-manager team, nearly 200 global fund managers questioned on current macro trends and investor behaviour revealed many investors, spooked by global economic uncertainty, have put an increasing importance on income.

According to the poll, 71% of equity managers and 67% of fixed income managers said income had become more of a priority among investors than previously. This was as high as 83% in real estate managers.

Nick Mansley, global director of multi-management at Aviva Investors, said: ‘In an environment of low cash yields and continued uncertainty around economic growth it is not surprising that investors are more focused on income. We expect this to be a long lasting theme across several asset classes.’

'Turned on its head'

Mansley said equity investors had not only become more interested in income but also more concerned about inflation than their fixed income counterparts.

‘[This] turns the world of investment on its head, and may reflect the broader uncertainty in markets at this point in time,’ he said.

Elsewhere, the survey found equity managers were the most optimistic about returns for their asset class. This compares with 20% of fixed income managers expecting negative returns on sovereign bonds and 13% expecting to lose money on corporate bonds.

‘The fact that some fixed income managers are actually expecting negative returns is perhaps less surprising given the levels that yields have reached in some markets but is a negative indicator for the prospects for the asset class,’ said Mansley.

On risks to their sectors, 70% equity managers questioned pinpointed the eurozone crisis as the biggest risk. Fixed income managers said the threat of default or restructuring could unsettle sovereign bonds (62%), while liquidity would be the biggest challenge in the corporate credit sector (over 70%).