Don’t be shy, ask ii…why are income funds in this growth portfolio?

Whether you want to find out how to start investing or how the stock market works, don’t be shy, ask ii.

27th May 2021 09:14

Dzmitry Lipski from interactive investor

No question is a stupid one, so whether you want to find out what you need to do to start investing or how the stock market works, don’t be shy, ask ii. Email your questions to: ask@ii.co.uk

A reader asks: why does one of interactive investor’s Active Growth model portfolios have two income funds in it?

Dzmitry Lipski (pictured above), Head of Funds Research, interactive investors, says: Fidelity Global Dividend and Jupiter Strategic Bond Funds are managed for total return - the profit generated by a combination of both a rise in the share price and any dividend income – and happen to pay an attractive income. This means they should appeal to both growth and income investors.

Over a five-year period, Fidelity Global Dividend delivered an annualised return of nearly 12%, which is in excess of its Morningstar Global Equity Income peer group and the MSCI World High Dividend Yield Index. The fund’s dividend yield stands at 2.7%. On the other hand, Jupiter Strategic Bond returned 4.2% annually and comfortably outperformed both its Morningstar Global Flexible Bond peer group category and the Bloomberg Barclays Global Aggregate Total Return Index. It also offers stable yield of 3.2%.

Both funds are good core options in a well-diversified portfolio in this context. Although these two funds offer some income distribution, they also provide exposure to different asset classes - Fidelity Global Dividend is an equity fund, while Jupiter Strategic Bond is a fixed-income fund. Combining equities and bonds is essential for portfolio diversification and managing risk. In fact, that makes the portfolio less vulnerable to large fluctuations in either market.

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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