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"A prolonged era of low returns could leave government [...] facing rising demand for social services and even income support at a time when public finances are already under pressure."

 

 

McKinsey & Company study, May 2016 

Seeking Sustainable Income in a Low Rate Environment

Blue Paper - Search for Income 2017

 

 

INVESTMENT INSIGHTS | BLUE PAPER | October 2017

Income shortage is set to be one of the biggest challenges for investors in the future. An aging population and the need to reduce the high levels of debt in developed markets could result in potential cuts to public welfare and, consequently, increase the need for income in retirement. Demand for income is also highly relevant in the institutional space for investors, such as pension funds, that require predictable cash flows. We believe that income generation will continue to be at the forefront of investor needs, as four major secular trends shape the outlook and behaviour of investors.

Why the Need for Income?

We have identified four challenging structural trends that are changing the investment landscape and driving income demand higher. The trends imply higher income needs especially for those of 45 years and older, so both in retirement and pre-retirement. To better understand these challenges the four scenarios are explained below.
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Where to Find Income?

Investors need to find new sources of income by broadening their investment universe, looking beyond traditional allocations to explore a variety of solutions in equity and multi-asset.

Income from Equity

equity-blue
In a period of income shortage, equities can be a relevant alternative to traditional income sources. Dividends can potentially provide attractive yields. Search for an enhanced income stream by combining high dividends and premiums from active option-management with potentially lower volatility than equities.

Income from Multi-Asset

multi-asset-blue
With a wide universe composed of various asset classes, multi-asset solutions are well adapted to bridge the income gap and look for income wherever it is, while taking full advantage of diversification to manage the risk. 

Our Investment Solutions

Amundi Asset Management has created a tailored and complete range of solutions designed to meet the income needs of investors and confront the challenges of the market, leveraging on the expertise and deep experience of its income teams.

Pioneer Funds - European Equity Target Income

Pioneer Funds European Equity Target Income_ Rollerblade
An equity solution which aims to combine a target distribution of 6.75%1 in 2017 and equity market participation investing in a diversified basket of high-yielding European equities enhanced through option writing.

Pioneer Funds - Global Multi-Asset Target Income

Global Multi-Asset Target Income
An innovative multi-asset solution aiming to deliver a target distribution  of 5%1 in 2017. It looks for a sustainable income higher than traditional bonds, with a lower volatility than equity markets, enhanced through option writing.  

First Eagle Amundi Income Builder Fund

First Eagle Amundi Income Builder Fund
A multi-asset and core long-term wealth solution aiming to deliver a quarterly coupon of 1.25% for distribution share classes2.
The fund aims for capital growth and regular income seeking to protect future income against inflation.

Pioneer Funds - Global Equity Target Income

Global Equity Target Income
A global equity portfolio investing in a global universe to increase opportunities for income potential and diversification.

Pioneer Funds - Real Assets Target Income

Real Assets Target Income - White Pont
A multi-asset solution aiming to deliver a target distribution of 5.25%1 in 2017. It offers the prospect of real returns through flexible and active investment in a broad range of real economy sectors. 
1This target income can be exceeded or undershot and should not be construed as an assurance or guarantee. Distribution dates are set on an annual basis and will be paid pursuant to the frequency of the unit class. The term Distribution refers to the income paid in any particular year. Treatment for tax purposes may vary depending on the jurisdiction. Please consult your tax adviser in order to understand any applicable tax consequences. Income target and distribution is gross of fees.
*Source: Amundi Asset Management as at 30 December 2016: Forecast for full-year 2017. The portfolio’s target return is adjusted annually. The income earned is distributed quarterly or semi-annually. Please note that the actually achieved value may deviate significantly from the forecast (also to the downside), especially in periods of pronounced market fluctuations. This target income can be exceeded or undershot and should not be construed as an assurance or guarantee.
2The payment of a dividend following a predetermined frequency and percentage of the net asset value (“Fixed Dividend”) may result to have the dividend composed of capital attributable to the Shares, whose amount will be driven by the amount of existing investment incomes and capital gains. Fixed Dividend will seek to pay out a dividend regardless of the performance of the Shares. As a result, the net asset value of such Shares may fluctuate more than the other Classes of Shares for which it is generally not intended by the Board of Directors to distribute capital, and the potential for future appreciation of such net asset value of such Shares may be eroded.

Why Choose us For Income Solutions?

Amundi Asset Management's Edge in Income Investing

  • Strategies encompassing income from dividends and premiums from active option management
  • Regular distributions with explicit targets set each year
  • Funds in the Pioneer Funds target income range have met or exceeded their income targets since inception#

 

First Eagle Amundi's Edge in Income Investing

  • Differentiated approach built on 3 pillars: margin of saftey, diversification and gold-related securities
  • Rather than chasing yield, focus on margin of safety with the objective of minimizing risk of capital loss
  • Fully aligned investment manager: the investment team, employees and founding family have material personal investments in the firm's strategies

 

#Note: for more information about the Pioneer Funds' income targets, please see the factsheets for each fund. 
Inception dates: Pioneer Funds - Real Assets Target Income - 28/03/2014, Pioneer Funds - Global Equity Target Income - 07/03/2008, Pioneer Funds - European Equity Target Income - 22/11/2011, Pioneer Funds - Global Multi-Asset Target Income - 02/05/2013

We look forward to hearing from you!