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Julian Gibbs

JO Hambro has attracted yet another top fund manager, Clive Beagles, former manager of Newton higher-income fund.

During the three years he managed the Newton fund, Beagles outperformed the FTSE All-Share index by 19.5 per cent.

JO Hambro has attracted these excellent fund managers by giving them a share in the equity of the company and by paying a bonus of half of a performance fee provided that they outperform their benchmark.

No outperformance, no bonus means that fund managers have every incentive to make money for themselves and their investors.

The performance fee is 15 per cent of the outperformance of the FTSE All Share index in the case of Beagles’ new fund, the JOHCM UK equity income fund.

The other thing I like about JO Hambro’s methodology is that it caps each fund according to the particular market sector. The new fund is capped at 750m and will yield around 4 per cent.

At a time when interest rates are likely to peak, this is highly attractive, especially as yields on equities are still attractive relative to the past 30 years’ average.

Dividends are growing faster than expected so there should be a rising income as well as some capital growth.

Beagles is extremely disciplined in his approach. For example, every stock that he buys must yield more than the FTSE All-Share yield on a prospective basis. He will invest in around 50-70 stocks at any time, mostly in the FTSE 350 index.

This fund is particularly attractive for self-invested personal pensions, trust investments and for any investor who wants a comparatively high and rising income.

With Beagles at the helm and likely to remain so for many years, it should be one of the income funds that every IFA should recommend to their clients.


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