If you have a need for income but you only invest in the UK, now could be a good time to diversify.
While the UK is well known for paying dividends, other countries are increasingly recognising their importance. There is a growing choice of funds which invest overseas for income.
Global dividends are at record highs according to the latest Henderson Global Dividend Index. On an underlying basis, the US, Europe, Emerging Markets and Asia Pacific, excluding Japan, all achieved impressive double-digit dividend increases during 2014, while the UK, Canada and Japan lagged behind.
The US is the main engine of global dividend growth. As we head into 2015 we have a backdrop of interest rates and inflationary pressures remaining suppressed, which means that equities continue to be a good place to find income.
For the global bond market as we look into 2015, we have a global deflation scare – the new aim for central bankers is to get inflation up to 2%, rather than driving it down as before. This is good news for bond markets.
One thing for investors to be aware of when using overseas bond funds is to what extent, if any, the fund operates a currency hedge. Unhedged funds add an additional source of potential return (and risk).
Let us help you to obtain a level of income that is both attractive and sustainable.
The value of your investments and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. The value of foreign currency denominated assets can rise or fall against sterling's value.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
