In the abnormal climate of low interest rates, finding a decent income is exceptionally hard. Pension funds, pensioners, or investors looking for an income, are struggling to find anything that returns anything over 3%.
However, there are investment funds that can offer over 4%.
The Legal & General Managed Monthly Income Unit Trust, is a £390 Million fund, holding 425 individual investment holdings, and today is yielding 4.3%, and what is incredible, this fund pays out to investors on the 21st day of each month.
The top ten holdings account for 14% of the overall fund. These are all bonds issued by these companies in UK Sterling (GBP)
BARCLAYS BANK PLC (GBP 10%, 21-May-2021)
PRUDENTIAL PLC (GBP 11.375%, 29-May-2039)
SOUTHERN WATER SRVCS FIN (GBP 6.64%, 31-Mar-2026)
STANDARD CHARTERED PLC (GBP 5.375%, Perpetual)
HSBC HOLDINGS PLC (GBP 6.5%, 20-May-2024)
COVENTRY BLDG SOCIETY (GBP 6%, 16-Oct-2019)
E.ON AG (GBP 6%, 30-Oct-2019)
EDF SA (GBP 6.125%, 2-Jun-2034)
ENEL SPA (GBP 5.625%, 14-Aug-2024)
NATIONWIDE BUILDING SOC (GBP 5.625%, 9-Sep-2019)
Very interesting to see some of the bonds issued by blue chip companies and the coupon paid, yes 10% by Barclays, 11.375% by Prudential and 6.5% by HSBC. It is incredible to see, these 3 giants in global banking and financial markets, need to offer creditors (the purchaser of these bonds) such a large interest rate. The cost of capital is huge. Of course, one has to be logical and scientific, and it is my assumption, but perhaps for example Barclays when it tapped the fixed income market with this bond issue at 10% maturing in May 2021, raised the money during the financial crisis of 2008, where only the brave were willing to buy bonds from financial institutions, and only credit worthy organisations were able to tap the bond market. It is always about timing.
A fund that offers a monthly return, but it is not a deposit account, the risk is the potential of default from the bond issuer.