75. Finding ‘safe yields’ and why haircuts and holidays might get more expensive

At one point in March, some companies’ shares were valued at less than the cash they held on the balance sheet. Dr Niall O’Connor, manager of the Brooks Macdonald Defensive Capital fund, tells us about these miss-pricings, explains why our haircuts and holidays may get more expensive and, with UK equity dividends forecast to remain low until 2025, highlights where he is finding ‘safe yield’ opportunities to replace this lost income.
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Long-term capital growth and protection is the name of the game for the Brooks Macdonald Defensive Capital fund. It aims to deliver positive absolute returns over rolling three-year periods, in a range of market conditions. The types of assets that this fund holds can be a bit complicated—convertible bonds, preference shares, structured notes, bond and loan assets, and discounted assets—but its aim is straightforward.

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