Partner Insight
Sustainable Income – Built to last How to give DC savers the income they need for a comfortable retirement By Lucie Majstrova, Investment specialist
➡ Read More about Baillie Gifford Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs. All data is sourced from Baillie Gifford & Co unless otherwise stated. As with any investment, capital is at risk. Past performance is not a guide to future returns This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
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oday’s retirees need to set themselves up for the longterm. Indeed, women reaching the state retirement age this year can expect to spend over twenty years in retirement. What does it mean for Generation DC? How can you balance between drawing the highest possible income today without jeopardising your long-term plans? Our Sustainable Income portfolio was set up to answer this challenge. To us, sustainable income means an income that grows with inflation over time. We aim to produce that by investing globally across nine different asset classes, in companies and countries that we believe are adapting to the world’s challenges to be the best income payers of tomorrow. Income for the long haul How can we generate income that can be relied upon for decades? We believe focusing on long-term income growth is the answer. Investing in a variety of asset classes allows us to match their different characteristics so we can deliver a resilient income today and grow it over time. Thanks to increased interest rates, fixed income, in general, offers more attractive income levels. Our global reach allows us to look beyond traditional fixed income asset classes, benefiting from higher yields on offer. When it comes to stable, inflationmatching income growth, we look to real asset classes: infrastructure and property. Our infrastructure investments were very valuable last year, delivering diversification benefits at a time when both equities and fixed income struggled. The income resilience that is often coupled with contractual linkage to inflation is a great match for our objectives, so while we have taken some profit since last year, it remains a key part of our strategy. Last but not least, the engine of real income growth is equities. That is, if you pick the right ones. Long-term income, not short-term yield To fully reap the benefits of our DC Innovation Unleashed
