‘We backed the banks right af­ter they crashed’

The Daily Telegraph - Your Money - - FRONT PAGE -

Gen­er­at­ing in­come from a port­fo­lio of funds is a chal­lenge many face in re­tire­ment. En­sur­ing that in­come is de­liv­ered reg­u­larly is a par­tic­u­larly dif­fi­cult task, as shares, bonds and funds all tend to de­liver their in­come at dif­fer­ent times.

One so­lu­tion is a fund that does it for you. The In­vesco Per­pet­ual Monthly In­come Plus fund, which con­tains £3.2bn, aims to do just that.

The fund is a favourite among in­come in­vestors and is a mem­ber of our Tele­graph 25 list of top port­fo­lios (visit tele­graph.co.uk/go/25funds for more).

The fund was launched in 1999 and in­vests pre­dom­i­nantly in high yield and riskier forms of bonds, as well as some shares.

Tele­graph Money spoke to Paul Causer, one of the fund’s man­agers, who heads In­vesco Per­pet­ual’s bond team with Paul Read. To­gether they man­age around £30bn across a range of funds.

Here Mr Causer ex­plains how he de­liv­ers in­come month on month, why he in­vested in the fi­nan­cial sec­tor right af­ter it crashed and why Lloyds is the best bank for in­vestors.

As the name sug­gests, the fund is geared to­wards in­come gen­er­a­tion. The peo­ple who hold money with us are typ­i­cally older savers who need in­come dis­tri­bu­tion to live day-to-day.

The in­come can move up and down, but we al­ways try to in­vest in a way that pro­vides a de­cent flow of money for our in­vestors.

Well, you don’t get any­thing for free. In or­der to get a good level of in­come we have to ex­pose our­selves to a cer­tain de­gree of risk. You have to ac­cept there will al­ways be volatil­ity, and we’ve been through some se­ri­ous bouts of tur­moil.

The only time we ever get com­plaints is when the in­come goes down. The level of in­come is

CV: Paul Causer

With a BSc in Eco­nomics from the London School of Eco­nomics, Paul Causer heads In­vesco Per­pet­ual’s fixed ed in­ter­est team. His in­vest­ment t ca­reer be­gan in the Eight­ies with Asahi Bank, be­fore he joined In­vesco Per­pet­ual in 1994. based on what the wider mar­ket is do­ing and how we po­si­tion our port­fo­lio in re­la­tion to that.

We gen­er­ally tar­get higher-risk bonds that pay out more in­come, and shares with strong div­i­dends.

In bonds, we have a lot in sub­or­di­nated bonds [an un­se­cured bond that will be paid back only af­ter other cred­i­tors have been paid if the com­pany goes bust] from banks, as well as some from in­sur­ers.

We have an­other sig­nif­i­cant pro­por­tion in high-yield bonds, in­clud­ing those from emerg­ing mar­kets.

It’s es­sen­tially a cor­po­rate bond fund with some shares, with the idea of adding some cap­i­tal growth as well as in­come.

When we’re ner­vous about the mar­ket we re­duce risk, and when we’re more bullish we add a bit more. How­ever, we can’t fight the mar­ket. If it’s in a down­ward cy­cle, it’s hard for us to buck that trend.

Some coun­tries in re­cent years have taken in­ter­est rates down to zero, which has ob­vi­ously had an ef­fect on yield.

Based on £10,000 in­vested in the fund, in 2000 we were pay­ing out our high­est in­come ever, nearly £750. In 2014 it was at its low­est, closer to £450. Last year we were pay­ing out arou around £575 – so it does change.

Vet­eran man­ager Paul Causer tells Harry Brennan how he in­vests to achieve a sta­ble monthly in­come

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