BlackRock says the traditional sources of income such as cash deposits and government bonds are now less attractive due to low interest rates, sluggish economic growth and inflationary pressure. It also highlights the trend for companies overseas to pay dividends,
Rather than holding companies with the highest dividends, BlackRock’s managers select companies most likely to generate income and growth over the long term. BlackRock says companies that pay dividends tend to be relatively stable and well established. They can afford to return some of their profits to shareholders. Less mature companies are more likely to reinvest their profits into their businesses, so dividends are less likely.
The BlackRock global income fund typically contains the stocks of 50 to 70 big, high quality companies. It is co-managed by director Stuart Reeve and managing director Richard Turnill, who will identify stocks on attractive valuations, with strong growth prospects and management.
BlackRock Continental European income fund typically contains 40 to 70 stocks. Managers Andreas Zoellinger and Alice Gaskell look for undervalued companies of all sizes with sustainable dividend payments, potential dividend growth and inflation protection.
BlackRock world resources income fund invests mainly in companies within the natural resources sector including mining, energy and agriculture. BlackRock trio Richard Davis, Joshua Freedman and Tom Holl typically select 50 to 80 stocks and can also boost income in a limited way through a derivatives strategy.
BlackRock’s UK income fund, launched in 1984, has been a consistent performer in recent years and some advisers may welcome a wider set of options from the same provider.
However, BlackRock is coming to the market with its global and European equity income funds later than some firms. The world resources equity fund is innovative but its focus on one sector may be too narrow for some.