How to generate income with fixed-interest investments

Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King

Investment, business concept
(Image credit: Getty Images)

With UK interest rates down to 4.5% and likely to fall further, it is becoming increasingly difficult to earn more than 4% from a deposit account. Inside a cash ISA, there is no tax to pay on interest income, but the chancellor is reported to be keen to chip away at the £50 billion locked up in them, ostensibly to encourage investors to shift into risk-taking assets, but more probably to generate extra tax revenue. What are the alternatives?

There are plenty of conventional investment trusts, especially those investing in UK shares, yielding over 4%, but many investors will not want the stock market risk. For them, Stifel, an investment bank and brokerage, has compiled a list of 33 relatively liquid “alternative funds” yielding between 4% and 15%, generated from what should be more predictable streams of income.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.