For UK investors who want a regular income without buying individual dividend shares, a portfolio of actively managed OEICs (open-ended investment companies) can provide broad diversification across UK equities, global shares, bonds and specialist income assets. By blending higher-yielding equity income funds with strategic bond and multi-asset income funds, it is possible to target an overall portfolio yield of around 5%-5.5%, although distributions are never guaranteed and can rise or fall.
Pure income vs total return: what matters most for UK retirees?
Example portfolio
| Fund | Suggested weighting | Historic yield |
| Artemis Income Fund | 20% | ~4.1% |
| Jupiter Merlin Income Portfolio | 10% | ~4.8% |
| Royal London Short Duration Global High Yield Bond Fund | 15% | ~6.5% |
| M&G Corporate Bond Fund | 10% | ~5.2% |
| Ninety One Diversified Income Fund | 10% | ~5.5% |
| Man High Yield Opportunities Fund | 10% | ~7.0% |
| Janus Henderson UK Responsible Income Fund | 15% | ~4.3% |
| Baillie Gifford Monthly Income Fund | 10% | ~5.4% |
Estimated portfolio yield: approximately 5.2%
Key fund data
| Fund | Ongoing charge | Historic yield | 1-year total return | 5-year total return |
| Artemis Income | 0.80% | 4.1% | 10% | 53% |
| Jupiter Merlin Income | 1.15% | 4.8% | 8% | 34% |
| Royal London Short Duration Global High Yield Bond | 0.63% | 6.5% | 8% | 30% |
| M&G Corporate Bond | 0.83% | 5.2% | 7% | 14% |
| Ninety One Diversified Income | 0.70% | 5.5% | 9% | 28% |
| Man High Yield Opportunities | 0.85% | 7.0% | 10% | 35% |
| Janus Henderson UK Responsible Income | 0.67% | 4.3% | 11% | 48% |
| Baillie Gifford Monthly Income | 0.52% | 5.4% | 9% | 31% |
Performance, charges and yields vary by share class and market conditions. Figures are indicative for widely available retail income share classes.
Investment Association website
Fund analysis
Artemis Income
Objective: Invest in high-quality UK companies capable of delivering both dividend growth and capital appreciation.
Advantages
- Experienced management team.
- Excellent long-term dividend growth.
- Focus on financially strong businesses.
Risks
- Heavy UK equity exposure.
- Income can fluctuate with corporate dividends.
Analyst view: Frequently appears on recommended UK equity income fund lists thanks to its disciplined quality approach.
Jupiter Merlin Income Portfolio
Objective: Generate income through investing in a diversified selection of income funds.
Advantages
- Multi-manager diversification.
- Exposure to equities, bonds and alternatives.
- Lower stock-specific risk.
Risks
- Higher overall charges.
- Performance depends on underlying managers.
Royal London Short Duration Global High Yield Bond
Objective: Produce attractive income from shorter-duration global high-yield bonds.
Advantages
- High income.
- Lower interest-rate sensitivity.
- Diversified global credit exposure.
Risks
- Credit defaults during recessions.
- Higher-risk borrowers.
M&G Corporate Bond
Objective: Deliver income through investment-grade corporate bonds.
Advantages
- Relatively defensive.
- Lower volatility than equities.
- Attractive income.
Risks
- Sensitive to credit spreads.
- Interest-rate movements affect prices.
Ninety One Diversified Income
Objective: Generate reliable income using multiple asset classes worldwide.
Advantages
- Diversified.
- Flexible asset allocation.
- Smoother returns than pure equity funds.
Risks
- Asset allocation decisions may underperform.
- Income may vary.
Man High Yield Opportunities
Objective: Maximise income from global high-yield corporate bonds.
Advantages
- One of the highest yields available.
- Global diversification.
- Active credit research.
Risks
- Higher default risk.
- More volatile during economic downturns.
Janus Henderson UK Responsible Income
Objective: Generate growing UK equity income while applying responsible investment criteria.
Advantages
- Sustainable investment approach.
- Strong dividend-paying companies.
- Attractive long-term record.
Risks
- ESG exclusions can reduce sector diversification.
- UK market concentration.
Baillie Gifford Monthly Income
Objective: Provide a regular monthly income alongside capital growth from a diversified global portfolio.
Advantages
- Monthly distributions.
- Global diversification.
- Blend of income and growth assets.
Risks
- Income varies with markets.
- Global currency exposure.
What analysts generally like
Morningstar analysts currently favour active UK equity income funds with experienced managers, reasonable fees and sustainable dividend strategies rather than simply chasing the highest yields.
Higher-yield bond funds can significantly boost portfolio income but should generally form only part of an overall diversified income strategy because of their greater credit risk.
Sharesify Podcast with Samantha Fitzpatrick of Murray International Trust
Investor verdict
It is possible to target an overall portfolio yield of around 5%-5.5% and for investors seeking that kind of natural annual income, a blend of 40%-50% equity income, 30%-40% bond income and 10%-20% diversified multi-asset income offers a balanced approach. The equity funds provide the potential for rising dividends and capital growth over time, while the bond funds help lift the overall yield and reduce portfolio volatility.
This type of portfolio is likely to appeal to retirees, ISA investors drawing an income, or anyone looking to supplement earnings while maintaining long-term investment growth potential.
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