A blog in collaboration with Aegon Asset Management.
Many investors are looking for a way to generate regular income from their investments, without sacrificing the potential for capital appreciation. At the same time, there are concerns about too much risk or insufficient diversification. An Income Fund offers a solution for this: it combines a stable source of income with the possibility of long-term value increase.
In this article, prepared in partnership with Aegon Asset Management, we discuss what an Income Fund is, how it works, and how the Aegon Global Diversified Income Fund helps investors with a balanced approach.
What is an Income Fund?
An Income Fund is a mutual fund designed to provide investors with a regular stream of income, often in the form of monthly distributions. These funds focus on income-generating assets such as:
- Bonds: stable interest payments, originating from government and corporate bonds.
- Dividend-paying stocks: Companies that pay regular dividends and offer potential for growth.
- Real estate (REITs): rental income and appreciation of real estate.
- Specialized Income: such as infrastructure and renewable energy with long-term contracts.
At the same time, Income Funds aim to increase capital through an active and flexible approach to investment management. This makes them attractive to investors seeking both stability and growth.
How does an Income Fund work?
The Aegon Global Diversified Income Fund is an example of an Income Fund that invests globally. This fund combines:
- Monthly income: With a distribution goal of 5% per year, it offers a regular income stream.
- Risk diversification: Investments are spread across multiple asset classes, sectors, and regions.
- Active management: The fund flexibly adapts its portfolio to changing market conditions.
The strength of this fund lies in its focus on five “income engines” that enable broad diversification and stable returns.
What does the Aegon Global Diversified Income Fund invest in?
- Bonds:
The fund invests in a mix of government and corporate bonds from both developed and emerging markets, taking into account risks such as creditworthiness and geographical diversification. - Stocks:
Dividend-paying stocks are an important part of the fund, with a focus on solid companies that offer both income and growth opportunities. - Real Estate (REITs):
Listed real estate offers stable rental income and growth potential thanks to asset appreciation. - Specialized Income:
This includes renewable energy and infrastructure, which often provide stable and predictable cash flows. - Cash and currency:
Part of the portfolio is held in cash and currencies for flexibility and risk management.
For whom is an Income Fund suitable?
Income Funds are ideal for:
- Investors who are looking for a regular income stream, for example to supplement their pension.
- People who are looking for an alternative to savings accounts with low interest rates.
- Anyone who wants a stable return, but also values diversification and risk management.
What makes the Aegon Global Diversified Income Fund unique?
The fund offers investors:
- Flexibility: Active adjustments to the portfolio to take advantage of opportunities in different markets.
- Diversification: Investments in low-correlated assets to spread risk.
- ESG integration: The fund takes environmental, social and governance factors into account to make responsible investment choices.
- Team-oriented approach: Supported by a team of more than 20 multi-asset and ESG specialists.
Concrete example: How does an Income Fund work in practice?
Suppose you invest €50,000 in the Aegon Global Diversified Income Fund. With an expected distribution of 5% per year, you will receive about €2,500 in income, divided into monthly benefits of €208. You can use this income for extra expenses or reinvest it for further growth. In the meantime, you benefit from the broad diversification and active approach of the fund.
What you also need to know
While the Aegon Global Diversified Income Fund offers many benefits, there are also some areas to consider:
- Management fees: The fund has an ongoing charge factor of 1.24% per annum. These costs can affect the net return.
- Currency Risk: Global investments involve foreign exchange risks. While some positions are hedged, unhedged positions can create additional volatility.
- Market risk: The fund is exposed to market fluctuations and economic changes, which can lead to fluctuations in returns.
Conclusion
An Income Fund such as the Aegon Global Diversified Income Fund offers investors the opportunity to combine a stable source of income with capital appreciation. With a diversified portfolio and active strategy, the fund responds to the needs of investors looking for security, flexibility and growth.
This article has been prepared in collaboration with Aegon Asset Management, a trusted partner with more than 40 years of experience in multi-asset solutions
Disclaimer
MeDirect Bank (Malta) plc, company registration number C34125, is regulated by the Malta Financial Services Authority and is licensed to undertake the business of banking in terms of the Banking Act (Cap. 371) and investment services under the Investment Services Act (Cap. 370).
The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness. The mutual funds are manufactured by Aegon Asset Management and distributed by MeDirect Bank (Malta) plc
If you invest in any product, you may lose some or all the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from any investment may go down as well as up. Products may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance.