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Allianz chips away at equity income

Allianz Global Investors has brought out the RCM European equity income
fund, an Oeic investing in blue chip companies in continental Europe that
pay dividends.

The fund has an initial income target yield of 5 to 6 per cent, along with
the potential for capital growth. It will invest in companies with proven
dividend records and strong cash flow.

Chief investment officer, Europe, RCM Neil Dwane and co-chief investment
officer European equities Jörg de Vries-Hippen will co-manage the fund.
Dwane joined RCM in 2001 as head of UK and European equity management from JP Morgan Investment Management. de Vries-Hippen, who specialises in the Swiss market, joined in 1992.

The managers make full use of the research resources available within RCM,
including 67 global analysts, and the grassroots network of independent
analysis of under researched market trends, the competitive environment and
global business developments.

When assessing expected dividends, the managers consider what companies are able to pay out and what they intend to offer as a dividend. The managers
will buy shares when they are out of favour with the market, giving the
potential to benefit from high dividends at reasonable prices and capital
growth on any recovery in share price. They believe high dividends can often
stabilise a company’s share price.

RCM feels that continental Europe is better equipped than the UK to
withstand the global recession because most countries in the region have
lower levels of corporate and consumer debt. It sees market falls as an
opportunity to buy quality, mature companies cheaply when dividend yields
are higher than bond yields.

This fund could appeal to investors who are finding it difficult to obtain
an income due to low interest rates and are willing to look further afield
for income.

However, competition could come from Standard Life Investments’ new European equity income and Invesco Perpetual’s European high income
fund, which combines equities and fixed interest.


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