Investing for income: Whom can I trust with my hard-earned cash?

With 600 options, it can be hard to find the best investment.

IF YOU are after a high income and want to do so through a collective investment, either in a PEP or through a direct holding, you are faced with a bewildering choice.

There are now some 600 different unit trusts, open-ended investment companies or investment trusts, whose funds range from corporate bonds, UK income growth, international high income funds and split income trusts. To take the pain out of choosing, here is what some expert independent financial advisers have to recommend.

If it's corporate bonds you are interested in, Jason Hollands of the London-based BESt Investment, recommends that you look at mainstream funds. "There are a number being launched investing in sub-investment grade loan stocks," he says, "but investors who need a reliable source of income should stick with the other funds that put their money in top quality bonds."

As charges are one of the main determinants of variation in performance, he advises to look at the Legal & General corporate bond that has no initial charge and an annual charge of just 0.5 per cent.

Among equity funds, he particularly likes Newton Income and BWD Equity Income. "Both give a reasonable yield and have shown good capital growth over the years."

Elsewhere in London, Kim North of Pretty Financial, points potential corporate bond investors at M&G Corporate High Yield, which was the first into the market with a fund that will look at higher-yielding loan stock offered by non-blue chip companies, the so-called junk bonds.

"In the past, the team managing the fund has got a good reputation for getting its investments right," says North, "and there's no reason now to think that they will start to pick up a lot of stock in companies that will default on their loans."

Among the fixed interest funds, she likes Aberdeen Fixed Interest, currently yielding around 7 per cent. "Among equity funds," she says, "you could consider the income funds from Jupiter, Perpetual, Premier and Royal SunAlliance. My overall favourite, however, is M&G High Yield, especially if it's to be put in a tax-efficient PEP wrapper."

In Shrewsbury, Philipa Gee, of Gee & Co, picks Newton Higher Income as her choice of equity funds: "This pounds 175m fund, which has part of its portfolio in preference shares and corporate bonds, is picked for its overall total returns, both income and growth. The group takes a collegiate view, so performance is not dependent on one fund manager. It picks out mainly blue-chip companies that will produce sustained dividend growth."

From Yorkshire, Graham Bates, of Bates Investment Services, recommends an investment in Save & Prosper's Equity Income. Like many income funds, it concentrates on blue-chip stocks - "The right place to be in the current state of the market," he says. "It's a steady, consistent performer that currently yields around 3.6 per cent."

Ailsa Brown, of RAD Young, in Glasgow, advises a look at the pounds 160m Henderson Preference & Bond fund, currently yielding around 6.5 per cent even if "its performance has been a bit off the boil during the last 12 months". This is because preference shares have been a bit of a drag. But looking at two-year performance, the fund is sixth in the fixed-interest sector, fifth over three years and second over five years. All this time, it has had the same fund manager, according to Brown.

When it comes to corporate bonds, she recommends CGU Monthly Income Plus, presently yielding around 6.8 per cent. "It has very low volatility, meaning that it shows a consistent performance, and while you expect it to show little growth, it has still increased by nearly 60 per cent over five years."

Also in Glasgow, David Thomson, of Aitchison & Colegrave, Scotland's largest firm of independent financial advisers, likes Britannia High Yield: "It has produced consistently good results and has an enviable long-term record, placing it in the top 10 per cent of high income funds."

"Its success is due to strong team performance, with sector specialists responsible for stock selection in their areas of expertise. This means the fund is aggressively managed, making extensive use of fixed interest and convertible instruments, enabling it to buy some lower-yielding growth stocks and sectors."

In Bristol, Roddy Kohn, of Kohn Cougar, advises risk-averse readers to look at M&G's conventional corporate bond. "It has a tried and tested management team, who don't invest in the riskier end of the market such as preference shares, and it is consistently in the top quarter of sector performance tables."

Among equity funds, he particularly likes City of London investment trust, which has produced a consistently rising income as well as good capital growth in asset values, and Johnson Fry Income, another consistent performer.

BESt Investment (0171-321 0100); Pretty Technical (0171-377 5754); Bates Investment Services (01332 955955); Gee & Co (01743 236892); FAD Young (0141-639 6194); Aitchison & Colegrave (0141-332 5961); Kohn Cougar (01179 466384); M&G (0800 328 3196); Britannia (0845 605 0555); CGU (0845 6072439); Aberdeen Prolific (0345 886666); Henderson Investors (0800 832832); Johnson Fry (0171-839 5688); Legal & General (01222 448412); Newton (0800 614330); Perpetual (01491 416123); Premier (08706 006363); Royal & Sun Alliance (08706 016183); Save & Prosper (0800 829100); City of London Investment Trust (0171-410 4100)

Have you tried new the Independent Digital Edition apps?
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Is this how Mario Balotelli will cruise into Liverpool?
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Junior Quant Analyst - C++, Boost, Data Mining

    £25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

    Service Desk Analyst- (Desktop Support, Help desk)

    £25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

    Junior Quant Analyst (Machine Learning, SQL, Brokerage)

    £30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

    UNIX Application Support Analyst- Support, UNIX, London

    £45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

    Day In a Page

    Air strikes? Talk of God? Obama is following the jihadists’ script

    Air strikes? Talk of God? Obama is following the jihadists’ script

    The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
    Ebola outbreak: Billy Graham’s son declares righteous war on the virus

    Billy Graham’s son declares righteous war on Ebola

    A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
    Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

    Not even Jeremy Clarkson is bigger than the BBC, says TV boss

    Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
    Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

    Nick Clegg the movie

    Channel 4 to air Coalition drama showing Lib Dem leader's rise
    Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

    Philip Larkin: What will survive of him?

    Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

    Waxing lyrical

    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
    Texas forensic astronomer finally pinpoints the exact birth of impressionism

    Revealed (to the minute)

    The precise time when impressionism was born
    From slow-roasted to sugar-cured: how to make the most of the British tomato season

    Make the most of British tomatoes

    The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
    10 best men's skincare products

    Face it: 10 best men's skincare products

    Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
    Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

    Mackay, Moody and another grim day for English football

    The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
    La Liga analysis: Will Barcelona's hopes go out of the window?

    Will Barcelona's hopes go out of the window?

    Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape