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It’s a strike

Still, the brutal fact is that, following the takeover of pubs operator Greene King, the Bearbull Income Fund has almost £30,000 of spare cash gathering income at the rate of about 1 per cent when all around there are decent-quality equities throwing off dividends offering over four times that rate.

So do I watch from the sidelines until the market decides that the world isn’t going to end? Could do. There is some sense to it. Reason it as follows – by keeping the £30,000 in a savings account yielding about 1 per cent rather than in high-yield equities generating 4 per cent-plus, the income fund loses about £1,000 a year. Meanwhile, if that sum were put into an equity, its value would only need to fall 3 per cent for the losses to be the same as the lost income. Yet because capital values will always be more volatile than dividends then, in a falling market, there is a high chance that capital losses would exceed income foregone. A 10 per cent drop in value would leave the fund £2,000 worse off than if it had kept the £30,000 in cash.

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