The £199m JP Morgan Multi-Asset Income fund has upped its European equity exposure to take advantage of the region’s strong dividends.
The fund has recently taken its European exposure within global equities up from 7.9 per cent at the end of 2012 to 12.5 per cent at the end of last month.
JP Morgan client portfolio manager Rob Worthington says: “We have increased our weighting in Europe. We are cautiously optimistic on Europe but from an equity income perspective we are positive. Both the UK and Europe, to a degree, have always had very good dividend paying names.”
Finding yield from equities is currently the fund’s biggest play, with heavy rotation into allocation dividend stocks funded partly from profits taken on high yield bonds.
High yield has recently been brought down from 55 per cent to less than 30 per cent in the fund. However the team believes high yield debt still offers good spreads generally and would consider European high yield in the future.
Worthington also say there are “good opportunities” for yield within European convertible bonds. He adds: “It is an asset class that many would struggle to access, certainly from a yield perspective. Convertibles provide us with good income attributes and a good degree of equity participation.”
Addidi Wealth director Anna Sofat says: “European equities have been undervalued since the bottom fell out of the market in summer 2011.They have recovered, but they have not come back to their pre-crisis level. So I think there is value there to be had.
“From a yield perspective many clients are looking for income and because the values are not there, you are also picking up some decent yields.”