As markets continue to shift, generating dependable income requires flexibility, discipline and a broad toolkit according to the latest discussions on Fund Calibre’s weekly podcast, where they were joined by Paul Flood, Manager of BNY Mellon Multi-Asset Income fund.
This latest episode discusses the evolving importance of income in retirement planning and how a multi-asset approach can provide diversification across equities, bonds and alternatives.
Paul and the Fund Calibre team chat through shifting market conditions, including inflation, interest rates and changing valuations, influence asset allocation decisions.
The interview also highlights opportunities in real assets, property and infrastructure, alongside a more value-focused approach to equities.
Finally, they look at how themes, fundamentals, ESG considerations and valuation discipline combine to identify attractive investment opportunities in today’s complex market environment.
Why you should listen to the interview: With income playing an increasingly central role in retirement planning, the insights shared offer a useful framework for building portfolios which aim to deliver both stability and long-term growth in a changing investment landscape.
This interview was recorded on 2 March 2026. Please note, answers are edited and condensed for clarity. To gain a fuller understanding and clearer context, please listen to the full interview.
Interview highlights:
Why income consistency matters
“Income is probably the primary objective in the fund. Given the change we saw with the FCA’s thematic review, which encouraged advisors to think differently about investment propositions in retirement.
“They’re being asked to consider the loss of income as a priority for people in retirement, just as much as the capacity for loss of capital.
“When we set up the strategy, we thought long and hard about what clients in retirement are looking for. We’re going to have far fewer people with final salary pension schemes that covered a lot of their income needs.
“Those with defined contribution pensions or SIPPs will be relying much more on their advisors to generate income from investment portfolios.
“To do that, advisors need confidence that the income is stable and consistent, so they can rely on it to support client income plans.
“We believe the key priority is to deliver stable and growing income, pounds in pockets, allowing investors, even in retirement, to remain invested in growth assets because they still have a long investment horizon.
“Our process focuses on securities that can pay and grow income, which has helped in difficult periods. In 2020, when many companies cut dividends, we delivered a stable income because we focused on assets with contractual cash flows that were less economically sensitive.
“Then in 2022, when inflation peaked at around 10.1%, we grew income by about 10.2%, supported by real assets with inflation-linked revenues. That allowed us to grow income in real terms for investors.”
Avoiding the income trap
“We don’t target a specific number. We did a lot of work when we launched the strategy to make sure what we were aiming for was achievable and sustainable.
“The income needs to be attractive in both low and high interest rate environments. You don’t want to overreach for income because that can come at the expense of capital.
“Your capital base is what generates future income, so undermining it would be counterproductive.
“Our approach is to target a premium, around 30%, to a traditional 60/40 portfolio. That adjusts naturally over time.
“If bond yields or equity dividends rise, our target rises too, but it remains achievable because the opportunity set evolves.”
Shifting between bonds and alternatives
“We don’t aggressively switch asset classes quarter to quarter. It’s more of a journey, moving as opportunities arise. That’s one of the strengths of income investing, it acts as a valuation tool.
“If income isn’t attractive in one area, we simply don’t allocate there. That kept us away from bonds when yields were very low, which proved beneficial in 2022.
“We had a larger allocation to alternatives and only about 12% in bonds, which helped us deliver a positive return when many multi-asset funds were down double digits.
“As we moved into 2023 and bond yields became more attractive, we reduced alternatives and increased bonds. But over the last 18 months, real assets have been out of favour, so we’ve started increasing exposure again.
“Alternatives fell from around 35% to about 15–16%, and more recently we’ve moved back up towards the mid-20s.”
Opportunities in real assets and discounts
“As bond yields have risen, discount rates used to value assets have gone up, putting pressure on net asset values.
“On top of that, negative investor sentiment has pushed valuations from premiums to discounts, in some cases 20% to 30% below NAV.
“It’s been a difficult period, but now you’re being compensated for many of those risks. Looking forward, if inflation picks up or energy prices remain elevated, demand for real assets could increase again.
“Over a three to five-year horizon, the opportunity set in real assets looks attractive relative to other areas. We’re seeing yields that provide good compensation for the risks involved.
“In renewable infrastructure, for example, sentiment has been hit by government intervention and changes to inflation assumptions.
“But those risks now appear priced in, with double-digit yields offering strong coverage. We think this creates a compelling opportunity for long-term investors willing to look beyond short-term sentiment.”
Conclusion: As markets continue to shift, generating dependable income requires flexibility, discipline and a broad toolkit.
Manager Paul Flood highlights how combining different asset classes, focusing on resilient income streams and maintaining valuation awareness can help investors navigate uncertainty.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
Main image: growth, imagine-buddy-vsLbaIdhwaU-unsplash
