‘The perfect yield on a stock is 4pc – no more, no less’

Investors have enjoyed strong returns from stock markets this year, despite fears of a full-blown trade war between America and China and a slowdown in Germany, Europe’s powerhouse. However, some believe a global recession is not far away. In Britain, the Bank of England has warned that a no-deal Brexit may cause the economy to shrink.

Similar fears pushed markets down last year, when most funds struggled. Investec Diversified Income was one that made a profit. John Stopford, its co-manager, explains how a pre-emptive move to sell stocks helped protect investors from the worst falls.

We look to deliver a moderate return as consistently as possible with limited losses, rather than going all out for growth.

So we focus on income, which is the most reliable part of most investments. The danger with investing for income is that you can get sucked into risky parts of the market by chasing a higher yield. There’s a sweet spot of a decent yield that’s sustainable, and that is somewhere around 4pc.

We also aim to make the fund’s performance half as volatile as the global stock market.

We own a mix of assets, so really the fund appeals to conservative investors.

The biggest interest we see is from people who have looked at funds that try to make a profit every year regardless of markets (“absolute return” funds) but were disappointed with the limited returns.

Other interest comes from those who bought bonds but are finding the returns inadequate. People recognise that we’re trying to deliver better returns but with the same risk you get from buying bonds.

We cap our exposure to stocks at 35pc for that reason.

There’s a third group that likes us because we pay a monthly income.

We had sold a lot of our risky investments at the end of 2017 because everyone else was confident that markets would continue to go up and we disagreed. We sold some more in January 2018. This helped us in February when markets tanked.

We bought lower-risk and safer investments in September when markets recovered because we knew people would become complacent again. That protected us well during the fall from October to December. This is a Hong Kong-based conglomerate that recently bid for British brewer Greene King.

There are concerns about the political situation in Hong Kong and its relationship with the