Savers will have to make some hard choices as rates remain low

This has been a boon to people with mortgages, but a large portion of the population have saved hard for retirement and now find it very difficult to get an income from their savings. Bank accounts and government bonds offer so little return that many people who would traditionally prefer such low risk investments have been forced to look elsewhere.

There are still plenty of investments that offer a yield, but they come with greater risk and savers have to consider how much risk is appropriate. Nowadays even 65 year olds can be long term investors; latest life expectancy figures for 65 year olds in

Yorkshire were 18.2 years for men and 20.6 years for women. This means that it may be sensible for pensioners to hold more risky investments, accepting the short-term fluctuations in the expectancy of better long-term returns.

At SGPB Hambros we are constantly looking for different sources of income that can offer clients an attractive return and diversify portfolio risks. In recent years a number of investment trusts have been launched aimed at income seeking investors. As they are structured as equities, investment trust prices depend on market supply and demand, but if they hold investments with stable and attractive sources of income the price fluctuations tend to be less extreme.

Empiric Student Property targets the top end of the student property market. They develop and run high quality halls of residence in centres with high student demand including local cities such as York, Sheffield, Huddersfield and Leeds (they avoid London due to the high costs). They target international students offering individual studios in buildings with good communal facilities such as gyms and social areas. This allows them to get full year occupancy and high rents.

Blending this type of investments with more traditional equities and bonds can create a portfolio with reasonable yield and return expectations even in today’s difficult markets and the spread of investments helps to reduce risk.

Rate rise expectations have been put off many times since the crisis. The Brexit referendum is a wildcard, but given the global environment it shouldn’t be expected to change the medium term picture too much. We therefore expect savers to have hard choices to make if they want a return on their hard earned money.

Investors do need to consider other factors before opting for a higher risk portfolio, such as the chance they might need funds at short notice and their tolerance for risk before opting for a higher risk portfolio, but for many it can make sense.​

In recent years a number of investment trusts have been launched.

Examples of such trusts include Starwood European Real Estate Finance, ICG Longbow Senior Secured UK Property and Empiric Student Property.

Starwood and Longbow make commercial property loans, filling a gap left by banks in the aftermath of the financial crisis; banks had limited appetite to make more of these loans, so it was possible to charge reasonably high interest rates on loans with moderate loan to value ratios.