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A More Nimble Approach to Income Investing

Jeff Holt, CFA

Jeff Holt: Investors in search of income in the current low-yielding environment may find what they're looking for in the allocation category. Multiasset income funds generally invest across stocks and bonds and other niche asset classes. They shift between those asset classes based on where the portfolio managers are finding attractive opportunities. 

These funds have different names and may fall in different allocation categories, but they share a common focus on providing income. You can often identify a multiasset income fund by a descriptor in its name, like income, diversified income, multiasset income, or income-builder. Their allocation category depends on their typical asset mix. 

Morningstar analysts cover several multiasset income funds, such as JPMorgan Income Builder (JNBAX) and BlackRock Multi-Asset Income (BAICX). These funds have piqued investors' interest as some of them still offer a 4% to 5% yield compared with an average yield of just 2.5% for the intermediate-term bond category. The higher yield doesn't come without added risk, though. These funds commonly hold a significant stake in high-yield bonds and stocks, lifting their risk profile. 

But investors looking for income may want to consider a multiasset approach.