Furthermore, property can add a level of diversification to both asset classes and offers opportunities for more income through inflation-linked rental deals, which ensure investors are protected in future years. While property assets can be illiquid, this lack of liquidity is often responsible for premium yields in this asset class, which is ultimately what many income-hungry investors are searching for.
In the income race, diversification is key. A diversified portfolio uses a mix of asset classes to avoid correlation, giving it the potential to enjoy low volatility in a variety of economic environments. By focusing on diversified income portfolios, investors can select the risk profile they are comfortable with, knowing that the best opportunities in each asset class will be sought across the investment spectrum to provide them with valuable income over time.
Jonathan Webster-Smith is head of the managed portfolio service at Brooks Macdonald
KEY FIGURES
1.35%
The yield on a 10-year gilt at the end of January 2015
3.5%
The approximate level of yields on the FTSE 100 recently
£15,000
The annual Isa allowance, which increased on July 1 2014, open to investors seeking an income
