Advisers reveal investment decline and shift towards alternatives

Thirty-two per cent of financial advisers and wealth managers have indicated that over half of their clients have seen a decline in incomes generated by their investments.

Research from TIME Investments, exclusively shared with MoneyAge, suggested that incomes have declined as a result of the fall in shareholder dividend payments by listed companies during the COVID-19 pandemic.
With 28% of investment professionals expecting the trend for cutting dividends to continue for another two years, TIME Investments said that traditional sources of income – such as equity income funds – will continue to struggle to provide both attractive and dependable returns, while the interest on fixed income assets “grinds ever lower”.
The new research, which was conducted by Pure Profile among 50 IFAs and wealth advisers during September, also indicated that advisers are reporting a growing interest in real assets as a source of income for long-term investors.

Against the backdrop of low interest rates, TIME Investments found that just under half (46%) of IFAs said they have seen a significant increase in clients taking cash from savings accounts to invest in alternative asset classes.

“Traditional sources of income have taken a hit during the COVID-19 pandemic,” commented TIME Investments head of investment, Stephen Daniels. “Our research suggests that investors are willing to diversify away from traditional income paying assets to alternatives that continue to pay attractive levels of income.”
The findings also showed that 32% of advisers are recommending an increased exposure to real assets such as infrastructure and real estate. Another one in four (26%) advisers have increased their recommendations for investing in renewable energy, while 24% are increasingly recommending long income property.
However, TIME Investments found that interest in equities and fixed income is continuing, with 50% of advisers recommending UK equities which are still paying dividends, and 38% recommending corporate bonds.

Daniels added: “In these uncertain times, less volatile and uncorrelated real assets such as infrastructure, property, and renewables are becoming increasingly popular as investors seek relatively stable sources of income that can be substantially higher than can be achieved by leaving cash in the bank.

“Just recently, the Bank of England has taken a step closer to introducing negative interest rates, by opening up discussions with banks on this ground-breaking policy.”

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