Equity Income and Distribution Funds for 2022
Published / Last Updated on 26/11/2021
The day that we are planning a video on equity income funds is the day markets tumbled by 3% as a new variant of concern is confirmed in South Africa and spreading.
That said, I will push on with my view of income producing funds in 2022. We are considering that a reasonable ‘bet’ for 2022 will be Equity Income and Distribution funds.
Why Equity Income and Distribution?
Equities:
As we hopefully get covid-19 under control in 2022, many firms, in particular in the Far East, UK and North America will have completed a full year’s trading without any lock downs restricting trade. This hopefully means a big return to profits and therefore dividend distributions of these profits after taxes. Equity Income funds invest in shares that traditionally declare stable and higher dividend income.
Gilts and Gov. Bonds:
Inflation is also driving bond yields higher. Capital values have fallen to match ‘coupon’ or debt interest yields to inflation. This will provide a health income stream. Fixed Interest and Index Linked funds invest in government and corporate bonds i.e. they lend money to governments or large companies for fixed or inflation linked income (debt interest payments). Increased inflation and/or increased interest rates will drive capital values down but income yields up.
Commercial Property:
Our high streets are now open and many offices have now retuned to work with lower levels of home working. This means rental income from commercial property will recover together with capital values rising.
There may be some ‘blips’ on the way but we believe the above sectors should fair well in a post-covid world.
The Funds to Watch:
|
Fund Availability |
Equity Income funds |
Fixed Interest and Index Linked Bond/Gilt funds |
Commercial Property funds |
|
Equity Income (Global or UK) |
Yes |
|
|
|
Distribution |
Yes |
Yes |
Yes |
|
Fixed Interest (Global or UK) |
|
Yes |
|
|
Index Linked (Global or UK) |
|
Yes |
|
|
Defensive Managed |
Yes |
Yes |
Yes |
|
Commercial Property |
|
|
Yes |
