In a falling market, investors would be forced to sell more units when prices are falling to sustain their required income. All of this means fewer units or shares to cash-in for the future and fewer units or shares to benefit from futures price rises.
With so many people expected to retire over the coming years, multi-asset income funds, with all the potential benefits they offer, are likely to see a continued surge in popularity.
The differences between natural income and unit encashment
| UNIT ENCASHMENT | NATURAL INCOME |
| Unit/shares encashed to pay an income | No units/shares encashed to pay an income |
| Amount of income paid will depend on number of units/shares encashed and their price | Amount of income paid will depend on dividends flowing from underlying investments (number of shares x dividend per share = income) |
The level of income can be potentially “managed” but the amount of units/shares that need to be encashed to achieve a desired level of income will depend on their price | Dividends per share can fluctuate but are not dependent on the price of shares |
| During market stress investors will be forced to sell more shares to get the income they require | During market stress investors are not forced to sell more shares and are paid to wait for capital prices to appreciate |
| The number of units/shares will decrease – possibly very significantly over the long term | The number of units/shares will not decrease, even over the long term and dividends per share can increase over time |
For more information about Premier’s multi-asset income solutions, visit the Premier Asset Management website; www.premierfunds.co.uk
This article is for information purposes and is only to be issued to financial intermediaries. It is not for circulation to retail clients. It expresses the opinion of the investment manager and does not constitute advice. Reference to any particular stock does not constitute a recommendation to buy or sell a stock. Persons who do not have professional experience in matters relating to investments should always speak with a financial adviser before making an investment decision. A free, English language copy of the Funds’ full prospectus, Fund Key Investor Information Document and Supplementary Information Documents are available on the Premier website, www.premierfunds.co.uk or by calling 01483 306090. Issued by Premier Asset Management. Premier Asset Management is the marketing group for Premier Fund Managers Ltd and Premier Portfolio Managers Ltd, who are authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS. For your protection, calls may be monitored and recorded for training and quality assurance purposes. Premier Asset Management, Eastgate Court, High Street, Guildford, Surrey GU1 3DE Tel: 01483 30 60 90 visit: www.premierfunds.co.uk 2602159398
