Do miners have a place in income portfolios in 2012?

Income investors have endured a lot of headwinds in 2011, but as we approach a new year, Cazenove's Income fund manager Matt Hudson said a number of sectors still face challenges.

Hudson, who has run the £56m fund since 2005, said miners are an area to avoid in 2012, having increased payouts to investors this year, while he is more positive on banks. "Miners have benefitted from the huge recovery in commodity prices since 2008 which has driven rising profits and latterly a big recovery in dividends as well," he said. "However, alongside the increase in commodity prices and corporate profits, the capital intensity of the sector has also risen to new highs. So while cashflows in the mining sector are very strong the capital costs required to sustain, let alone gr...