OVER the last few years, I have often written about the over-valuation of many assets and the challenges that investors faced over sourcing sustainable investment income.

Years of financial repression from central banks and far too much loose money chasing too few assets made income hunting for investors in most asset classes barren. What investors really needed was a clearing of the decks, a fall in asset values and an increase in yields to ease the negative side effects of the manipulations created by the zero-interest rate world that we lived in.

Fast forward three months and we live in a very different world; on that point I am sure we can all agree. The only element that seems to have remained constant in a world that is barely recognisable from just the start of this year is the fact that it remains extremely tough for investors to find an attractive and sustainable income stream.

In fact, it has got even harder. Markets have fallen, UK equities have been hit hard and I keep on reading about rising yields in corporate bond markets. Thats all true, we would have to concede, but it has not led to an improvement in the prospects for those wanting to achieve an income from their investments in mainstream assets.

In a world where the traditional risk free assets of cash and government bonds offer zero returns combined with a high degree of potential inflation risk, investors are forced to look elsewhere and take higher risks to achieve any form of investment income.

The good news is that by thinking outside the box, there are a host of exciting income opportunities for us to exploit for our clients. However, the key message is that we must be highly selective and very nimble.

The best prospects that we can currently identify to achieve a high and sustainable income are in selective credit markets, where there are presently exceptional opportunities on a level with those that we saw in 2008.

It is on such investments that we are primarily focusing our attention and where we are convinced that we can create the best long-term income and total returns from any recovery from todays medical, economic and market troubles.

With our higher risk income opportunities, we are chiefly looking at selected higher-risk corporate and consumer credit markets, where default risks have certainly risen, but where such risks are priced into current yields. We have been able to identify specific and selective corporate credit opportunities with high yields and only a short time until those bonds mature.

As an example, a key holding within our portfolios is an investment-grade rated, corporate credit focused fund with a yield above 7% and with a total portfolio duration to maturity of less than two years. Such opportunities rarely present themselves and we are seeking to take advantage of such specific dislocations created by the recent market turmoil.

Asset-backed or mortgage-backed securities on both sides of the Atlantic have been hit incredibly and undeservedly hard during the recent market volatility, and offer investors high levels of income and almost unrivalled opportunities for capital gains.

We own investments in both Europe and the US where yields of around 10% are currently on offer. These yields reflect that risks in the global economy have risen, but in our view provide investors with a prospect that most other markets dont at this time: sustainable income at a fair price in a world where achieving a healthy income from ones investments remains surprisingly challenging. These markets have been indiscriminately penalised by general investor panic and an overpowering desire by investors to flee to cash; our approach has been to take advantage of the chaos caused by such behaviour and exploit price discrepancies on behalf of our clients.

We live in an unprecedentedly challenging time for income investors. Frankly, we look at the paltry levels of income available on many investments and are fearful for the prospects of investors in many investments, given the importance of income to an investors overall total return.

But just as the investment gods have taken on one hand from some investments, they have given with the other hand to create different investment opportunities. We have to say that the future aint what it used to be, as the famous baseball coach Yogi Berra once said, and investment income is certainly an example of where life has become increasingly problematic.

However, by thinking differently, looking outside of the box and by being nimble, there are sustainable and attractive levels of income that we can find for our clients. This gives us confidence that we can continue to help our clients achieve their income requirements and to help them meet their investment aspirations for the future.

Tim Wishart is head of Scotland and the north of England at Psigma Investment Management

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Personal Finance: Do you yield? Searching for investment income in a zero rate world - HeraldScotland