UK income investors face a number of dark clouds on the horizon. Dividends are poised to fall as the cuts announced at the start of the year by companies, such as Rio Tinto (RIO), Glencore (GLEN), Standard Chartered (STAN), Barclays (BAR) and Rolls-Royce (RR), take effect. In addition, sluggish dividend growth and the possibility of market volatility if the UK votes to leave the European Union (EU) on 23 June, are fuelling investor anxiety.
In this kind of environment income-seekers need to focus on asset light, 'economic moat' type companies that are better able to withstand macroeconomic pressures, says Hugh Yarrow (above right), manager of TB Wise Evenlode Income Fund (GB00B40Y5R17).
He says: "What we always say about the macro policy is that we're looking to insulate the portfolio from the macro picture rather than predict it and place bets.