Diversify income streams now: Eaton Vance
Investors should be flexible and diversify their income streams and consider equity sectors such as informational technology and health care, so they can satisfy their "needs", in a low and negative rate environment, according to fund manager, Eaton Vance.
The firm's equity portfolio manager, Michael Allison, said: "With headlines that call attention to the $9 trillion in global debt trading at negative yields, investors are right to be worried about finding sources of income without taking on too much risk".
But when it came to finding engines of income around the world, that was challenging too.
Dividend portfolios were often "heavy weighted with traditional income-paying sectors, such as real estate investment trusts (REITs), telecom, utilities and consumer staples", but that did not offer much diversification, he said.
But if investors looked at an array of income-producing securities and took a flexible approach, they may be able to navigate the challenges that faced the traditional sources of income.
"Investors should consider a diversity of income streams by utilising a global, multi-asset class approach in to income investing."
Investors should consider equity sectors that included financials, health care, industrials and informational technology, while they augmented the strategy with domestics and international high-yield corporate bonds and preferred stocks.
"By using many engines to generate income, we think investors may be able to overcome the challenges posed by today's low- and negative-rate environment," Allison said.
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