Diversified Income Fund

A tried and tested defensive return strategy with a proven track record of protecting the downside in weak markets and capturing the upside in less challenging conditions
A tried and tested defensive return strategy with a proven track record of protecting the downside in weak markets and capturing the upside in less challenging conditions

Defensive, when it matters

The Fund aims to provide investors with attractive, sustainable income, with scope for capital growth. It aims to achieve this through an actively managed portfolio with a bottom-up focus on resilient assets and by limiting downside when markets weaken

A defensive return fund for today’s unpredictable markets

The impact of structural market ​changes since the GFC is evident in the increased frequency and severity of ‘flash crashes’.
John Stopford
Jason Borbora-Sheen

Key Highlights

01

Focus on defensive returns, with capital preservation, over the long-term

02

Seeks to generate returns primarily from income – targeting around 4% yield p.a. (payable monthly)1

03

Aims for volatility of less than 50% of UK equities1,2

Protecting the downside during volatility

Launched in September 20123, with a focus on capturing returns while minimising drawdowns, the Fund has a track record of protecting the downside and minimising losses during episodes of market volatility.

Figure 1: Attractive upside skew versus UK equities

Protecting the downside during volatility

Past performance is not a reliable indicator of future results, losses may be made.​

Diversified Income Fund average monthly gain and loss as a proportion of UK Equities average gain and loss.​
Source: Ninety One, in GBP gross of fees and taxes with income reinvested, UK Equity returns are for FTSE All Share Index, from 1 September 2012 to 31 August 2020.

Suitability and uses

  • An alternative to absolute returns funds, many of which have provided disappointing returns for investors
  • Suitable for a range of investors who need lower volatility growth
    • A defensive anchor within an overall portfolio
    • A core retirement building block for consolidation and drawdown
    • Investors looking to de-risk their portfolios in uncertain markets
  • A Fund that fits into advisers’ risk profiling and ratings processes
Fits into advisors’ ratings and risk profiling processes
Duversified Income Fund risk ratings

Key facts

  • Domicile

    United Kingdom
  • Risk profile

    3
  • ISIN

    GB00B2Q1J923
  • SEDOL

    B2Q1J92
  • Fund inception date

    18/04/1994
  • Share class inception date

    03/03/2008
  • Performance reference

    4% p.a. (GBP)
  • IA sector

    IA Mixed Investment 0-35% Shares
  • Minimum investment

    £1,000,000
  • Valuation & transaction cut-off

    12 noon (forward pricing)

1 Performance and volatility targets may not necessarily be achieved, losses may be made. The amount of income may rise or fall. The yield target is dependent upon market conditions and consequently may need to be revised. These internal parameters are subject to change not necessarily with prior notification.
2 UK Equities defined as FTSE All Share TR.
3 Inception date: 3 September 2012. Prior to this date, the fund was called Managed Distribution, and was managed to a different investment objective.

General risks
The value of investments, and any income generated from them, can fall as well as rise. Where charges are taken from capital, this may constrain future growth. Past performance is not a reliable indicator of future results. Investment objectives and performance targets are subject to change and may not necessarily be achieved, losses may be made.

Specific Risks
Currency exchange: Changes in the relative values of different currencies may adversely affect the value of investments and any related income. Default: There is a risk that the issuers of fixed income investments (e.g. bonds) may not be able to meet interest payments nor repay the money they have borrowed. The worse the credit quality of the issuer, the greater the risk of default and therefore investment loss. Derivatives: The use of derivatives may increase overall risk by magnifying the effect of both gains and losses leading to large changes in value and potentially large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss. Emerging market: These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems. Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. insolvency), the owners of their equity rank last in terms of any financial payment from that company. Interest rate: The value of fixed income investments (e.g. bonds) tends to decrease when interest rates rise. Government securities exposure: The Fund may invest more than 35% of its assets in securities issued or guaranteed by a permitted sovereign entity, as defined in the definitions section of the Fund’s prospectus.

Important information
All information is as at 30 June 2020 unless otherwise stated.

Indices are shown for illustrative purposes only, are unmanaged and do not take into account market conditions or the costs associated with investing. Further, the manager’s strategy may deploy investment techniques and instruments not used to generate Index performance. For this reason, the performance of the manager and the Indices are not directly comparable.
If applicable FTSE data is sourced from FTSE International Limited (‘FTSE’) © FTSE 2020. Please note a disclaimer applies to FTSE data and can be found at www.ftse.com/products/downloads/FTSE_Wholly_Owned_Non-Partner.pdf.

Fund ratings may be provided by independent rating agencies based on a range of investment criteria, and do not constitute investment advice by Ninety One. For a full description of the ratings please see www.ninetyone.com/ratings.
Dynamic Planner® is a registered trademark of Distribution Technology.

Figure 1: Diversified Income Fund average monthly gain and loss as a proportion of UK Equities average gain and loss. UK Equity returns are for FTSE All Share Index, from 1 September 2012 to 31 January 2020.