Rising inflation challenging for income investors



The rising inflation has driven income investors to search for cash alternatives and the return to normal economic activity will see inflation move progressively higher in the long term, eroding savings, according to the boutique investment house Prime Value Asset Management.
An emerging alternative for investors is diversified income or cash enhanced funds, which diversify across unlisted securities to deliver above inflation returns at the lower end of the risk spectrum, Prime’s fund manager, Matthew Lemke said.
According to him, investors were being let down by ‘no risk’ traditional cash holdings, which were going backwards against inflation.
“Quality, diversified income funds can provide more stability. They provide important ballast to a portfolio over time whilst earning an above-inflation return. This protects the real value of hard-won savings,” Lemke said.
He added that such funds were becoming more popular with investors looking for a middle ground between cash and more volatile assets.
Lemke currently manages the Prime Value Enhanced Income Fund, which aims to return the 90-day Bank Bill/Swaps (BBSW) rate plus 2% net of fees.
Boutique manager Prime Value Asset Management was founded in 1998 and is part of an investment group including Shakespeare Property Group, managing equities, income securities, direct property and alternative investments.
Recommended for you
Perpetual has appointed a new CEO for affiliate J O Hambro Capital Management, as it tries to stem outflows and refresh the brand.
Outflows of US$1.4 billion from its US equity funds have contributed to GQG Partners reporting its highest monthly outflows for 2025 in August.
Domestic equity managers are lagging the ASX 200 in the first half of the year, according to S&P, with almost three-quarters of Australian equity funds underperforming over the six-month period.
ETFs saw almost $5 billion of inflows during August, with international equities gaining double those of fixed income funds, as total assets close in on $300 billion.