The fund will aim for a high and rising income by investing in a portfolio of 60-90 European companies excluding the UK. It will be managed by Malcolm Millar, who joined Jupiter in 2002 from PriceWaterhouseCoopers. He has managed the Jupiter Pan-European Growth Sicav since May 2003.
Millar will invest in a broad range of companies that can sustain profit growth and grow dividends. He will work closely with Jupiter’s head of European equities with Alex Darwall, Cedric de Fonclare who manages the European Special Situations fund and star income manager Anthony Nutt.
The fund will initially have a net target yield of 3 per cent and will contain established companies with attractive valuations that can grow their dividends. It will have a bias towards large and medium-sized companies.
Financials and consumer sectors are viewed by Millar and the Jupiter team as promising sectors. European banks that have strong domestic businesses but are also expanding overseas will be targeted for inclusion in the fund, as will companies in the consumer sector. Luxury good provide a good example, as wealthy people who are not affected by short-term economic worries underpin this market.
Jupiter believes there is great demand for income funds and thinks this fund will provide diversification for investors who usually rely on UK income funds.
While it used to be the case that clients and IFAs looked mainly to the UK for income because this was where the higher yields were to be found, the situation is now changing.
Fund management groups have started to explore international income opportunities on the back of corporate restructuring in Asia for example, where companies are starting to pay dividends. Some fund management groups are taking the global approach, while Jupiter has joined Newton and Resolution in exploring Europe.
Although Jupiter is not the only fund manager looking for income in Europe, choice is limited, so this could be a welcome addition.