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Euro income a matter for Integrity

Investment boutique Integrity fund Managers has established what it believes is the first European income fund of funds available to the UK market.

Fund manager Colin Fogwill founded the company when Sun Life, the firm he previously worked for, was taken over by Axa in 1998. Integrity has teamed up with Elite Fund Administration, part of the Way Group, to offer the new fund Elite Integrity European income.

This Oeic has a target yield of 4.8 per cent gross and will invest in both UK-based and continental European income funds, some of which are not well known to UK investors. It was launched because Integrity wanted to provide something different to the usual array of UK equity income funds available to UK investors.

Integrity says European fund management groups have a longer track record in European equity income funds than those in the UK. It believes investing with these firms gives it an edge over the relatively few UK-based European income funds that do not take a multi-manager approach.

The new fund currently invests in funds from UK-based Resolution, Newton and Schroders, alongside European managers Parvest – part of BNP Paribas – and ABN Amro.

These funds were chosen from a universe of 600 that Integrity researched initially through the Internet. They looked at all funds paying income, then whittled this universe down by looking at the risk strategies of each fund, the history of the fund manager and the charges. They were also careful to ensure the underlying stocks within each holding did not overlap and that there was a good geographical spread within the overall portfolio.

According to Integrity, integration within European and growth in the emerging Europe means companies can benefit from increases in both their share prices and the dividends they pay to investors.

While this fund stands to benefit, negotiating charges on the underlying funds could be a problem. Integrity says that when it was constructing the initial portfolio, it did not invest with some managers because their charges were too high. This could have a bearing on the portfolio if the manager wants to replace or add to his existing holdings.

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