Jeff Prestridge: The world is your oyster

9th March 2011

It's a belief that is as strong today as it was 20 years ago when I was first drawn to the merits of these funds by a certain Peter Edwards who ran a wonderful financial adviser company called Premier Unit Trust Brokers from Bristol in the West Country.

Edwards spent most of his working life (he's long retired) preaching the virtues of ‘equity income' to his clients.

And he made many of them very prosperous in the process, cleverly urging them to reinvest the dividends from their funds in more fund exposure, thereby benefiting from the compounding of dividend growth.

He was also the founder of the respected ‘white list' – a meticulous annual performance analysis of UK equity funds which Principal Investment Management continues to run to this day.

The idea behind the white list was to identify the crème de la crème of the UK equity income universe – those funds that are able to deliver a long term mix of capital and income growth for investors.

Funds such as Invesco Perpetual Income, Invesco Perpetual and Artemis Income have long remained on the ‘white list' and their long term investment records are a testament to the equity income story.

Ten year returns of 122 per cent, 122 per cent and 89 per cent are not to be scoffed at. These funds are also run by some of the best managers in the business in the shape of Neil Woodford (Invesco Perpetual) and Adrian Frost (Artemis).

Yet, in recent years, the equity income story has gone global. The increasingly concentrated nature of the annual distribution of the UK stock market – dominated by the likes of Shell, Vodafone, GlaxoSmithKline and AstraZeneca – together with dividend problems at BP (caused by the horrendous oil spill in the Gulf of Mexico) have caused some fund management groups to look further afield. 

And they've liked what they've seen – compelling dividend growth stories in countries such as Brazil, Australia and the United States.

In the United States alone, there are a whole tranche of companies (the likes of Coca Cola, Chubb, Johnson & Johnson and Procter & Gamble) that are as dividend-friendly as the likes of UK counterparts Tesco, Shell and Greggs.

As a result, there has been a splurge of new global income fund launches – the likes of M&G Global Dividend (run by the impressive Stuart Rhodes), Newton Asian Income, JP Morgan Global Emerging Markets Income, Artemis Income and Henderson Global Dividend Income (around since 1998).

Next month, Henderson will launch another global income fund called Henderson International Income investment trust.

Its objective will be to seek a rising level of dividends (as well as capital appreciation) from equities (and a little bit of bonds) outside the UK. With a target yield of four per cent and the prospect of dividend growth, it should prove attractive to income seekers (the fund can be held inside an Isa).

Global income is not a particularly new investment story. It's an underdeveloped story which fund management groups and investors have been slow to grasp. It's worth more than a cursory glance.

Speak to a good financial adviser ( if you're vaguely interested. They should point you in the right direction.

Read Jeff's other blogs.

Jeff Prestridge: Let the Isa season begin

Jeff Prestridge: Time to trust your investments

Jeff Prestridge is personal finance editor of the Financial Mail on Sunday. Follow him on Twitter @JeffPrestridge

To receive our free weekly email sign up here

Leave a Reply

Your email address will not be published. Required fields are marked *