Anyone managing a successful higher-yielding portfolio for the drawdown client needs to keep a very sharp focus on risk as well as return. That means being able to demonstrate good active asset allocation and strong stock and fund selection.
If an investor is using funds, it means understanding exactly what is in the portfolio to make sure there is genuine diversification and picking expert managers who can demonstrate a judicious approach to risk management.
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With skill and attention, it is arguably possible to deliver returns that are close or equal to those of an equity income strategy and with markedly less volatility.
John Langrish is head of investments at James Hambro & Partners
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