Aim: Income and growth by investing in the equities of big and medium sized US companies
Minimum investment: Lump sum £1,000, monthly £100
Investment split: 100% in US equities
Isa link: Yes
Charges: Initial 4.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0800 727 770
JPMorgan Asset Management’s US equity income fund aims for income and growth by investing in the equities of big and medium-sized US companies.
Chelsea Financial Services managing director Darius McDermott says: “To defeat what is considered a bellwether for the American economy, the S&P 500, is no easy task for an active manager. Indeed, it is a rare occasion when I decide to invest my faith in a US manager looking to outperform this benchmark, given how notoriously efficient the US market is. However, if one moves away from a mandate of capital return, this area may be an option for IFAs who need to satisfy the appetites of yield-hungry investors.”
McDermott notes that traditional wells of income provided by companies in UK and Europe are drying up as firms come under increasing pressure to cut dividends. As a result, he feels that IFAs may have to look at managers with access to the bigger US market to maintain their clients’ income streams.
“The case for income investing in the US is stark. Over the past 10 years, 815 companies in the US have increased their dividend compared to 343 in the UK,” he says.
To tap into this potential stream of income across the Atlantic, JP Morgan Asset Management recently launched a US equity Income fund. McDermott points out that the fund is currently yielding 4.6 per cent gross against a benchmark yield of 3.1 per cent.
“There is obvious competition, such as the Jupiter North American Income. However, JPM will boast experience and performance. The fund’s co-managers Clare Hart and Jonathan Simon have 37 years experience in US equities between them. Also, JPM’s long-running US-based mirror fund, US equity income strategy, has beaten its benchmark by 2.2 per cent since inception in 2002. It has beaten the benchmark by 6 per cent over one year. He concludes that the fund’s charges are in line with the competition.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average