Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, said investors looking to make attractive incomes over the next year should broaden their horizons rather than focus on UK assets.
Predicting interest rates will stay at their all-time low due to the imminent Brexit negotiations, McEntegart concluded that while a rise in inflation may cause some upward movement on bond and dividend yields, the opportunities in the UK will remain limited.
“It is clear to us that investors seeking income need to look beyond UK assets in 2017, with the opportunities to capture a decent level of income from traditional UK assets limited,” McEntegart said. “The Bank of England will most likely keep interest rates low as the Government prepares to exit the European Union, and in this environment, interest rates on our bank accounts will remain very low.”
Investors should look to the US and Asia, including Japan, where infrastructure spending looks set to benefit the economy, he explained. “In these jurisdictions, economically-sensitive assets such as banks and those sectors that stand to benefit from infrastructure spend are where attractive yields and total return opportunities can be found.”
