29 May 2024
Traditionally, many Asian investors prefer the perceived safety of the money market and bank deposits, allocating an average of 40% of their assets to cash to achieve their financial goals.1 However, in the close-to-zero interest-rate environment that followed the global financial crisis, investors began to seek different products that offered a higher income.
Even though interest rates are now higher, achieving a regular income remains a priority for Asian investors. Through income investing, Asian investors not only capture a potentially higher income than cash but may also earn capital gains from their investments.
Note that income products are not risk-free and carry no guarantees. Thus, we believe moving towards a “Better Income” approach that balances risk, growth, and income to reflect investors’ needs is important.
The “Better Income” approach is designed to understand an investor’s objectives and the underlying risks associated with certain levels of income generation. Income brings with it varying levels of risk commensurate with the amount of income an investor seeks.
For example, a younger investor with a long-term horizon may be ready to sacrifice some short-term income in pursuit of wealth accumulation, whereas a retiree may want to preserve their capital and seek a regular income level just above cash rates.
Remember, “income” is not “interest”, and it is not “risk-free”. That’s why investors should understand how their portfolios can be built around the level of risk they are willing to take. What’s more, “Better” does not necessarily mean the highest income level but rather the stability and consistency of reasonably higher yields generated throughout various market cycles.
We believe that investors should thoroughly understand a particular source of income and its investment risk profile to achieve a stable income while making their capital last as long as possible.
Different sources of income
*Investors may directly receive an income (in the form of dividends) if they hold equities. Alternatively, they may indirectly receive an income (in the form of distributions) if they own mutual funds, exchange-traded funds (ETFs), or other pooled vehicles that hold equities.
Distribution of incomes, the frequency of distribution and the amount/rate of incomes are not guaranteed. Positive distribution yield does not imply positive return.
1 Manulife Investment Management commissioned NielsenIQ to conduct an online survey of 2,000 people from Hong Kong, Taiwan, Indonesia, and Malaysia – 500 people from each market – who are aged 20 to 60 between 25 August and 6 September 2022. The research aims to assess people’s retirement readiness and aspirations, including savings and investments, and lifestyles and family issues they consider when planning for retirement.
Retirement withdrawal and managing inflation
When it is time to enjoy what you’ve always dreamed of doing, the retirement planning doesn’t end there. It’s important to regularly review your withdrawal strategy and make adjustments as needed to keep changing economic conditions from throwing you off track. Consider the four tips to help keep inflation from depleting your retirement savings sooner than you expected.
Strike a balance in life, and most importantly, in your portfolio!
A balanced asset allocation usually provides investors with a smoother investment experience and perhaps helps protect them from selling equities after they have already fallen in price. If you believe that we are likely to enter a period of further economic weakness, we’re likely to be reminded of the importance of bonds in a portfolio.
Five timeless principles for investing success
While investing in volatile times can sometimes challenge your discipline and commitment, there are five timeless principles to include in your investment strategy that can help ease your mind and keep you focused on the long term.
Beyond the hyperbole: three macro takeaways from the 2024 US elections
What investors and policy watchers should take away from the 2024 election results depends, in part, on time horizon.
How might the US election and China’s stimulus package impact Asian fixed income?
Asia Fixed Income Team analyses how the US election and other recent major events could impact the region’s fixed income markets.
Assessing China’s latest stimulus measures
Greater China Equities Team analyses the latest round of strategic stimulus and explains why it warrants more than short-term tactical attention. The team also highlights a case study of Chinese companies that are ‘going-global’ to showcase this interesting juncture in the country’s corporate development.
Disclaimer:
The above information has not been reviewed by the SC and is subject to the relevant warning, disclaimer, qualification or terms and conditions stated herein. Manulife Investment Management (M) Berhad Registration No: 200801033087 (834424-U) (hereinafter referred to as “Manulife IM (Malaysia)”) is a wholly owned subsidiary of Manulife Holdings Berhad and holds a Capital Markets Services License for fund management, dealing in securities restricted to unit trusts, dealing in private retirement schemes and financial planning under the Capital Markets and Services Act 2007. Manulife IM (Malaysia) operates under the brand name of Manulife Investment Management which is the global wealth and asset management segment of Manulife Financial Corporation. Information posted herein is intended for the exclusive use by the recipients who are allowed to receive it under the applicable laws and regulations of the relevant jurisdictions. Certain information in this post may contain projections or other forward-looking statements regarding future events, targets, management discipline, estimates or other development trends of financial markets. There is no assurance that such events will occur, and actual results may be significantly different from what is contained herein.
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