Sustainability of income
The portfolios focus on providing a natural income, for example income generated by a dividend payment on an equity or interest paid on a bond.
This strategy can be a more reliable strategy than the traditional encashment approach, where units or shares are sold to generate income. Encashment can cause problems when markets are volatile, resulting in the erosion of the underlying investment pot if investors are forced to sell to meet their income needs after markets have fallen.
