Before the revamp, the Jupiter North American fund invested for growth. The new version invests for income as well as capital growth, with the option for accumulation units for investors who prefer to automatically reinvest their dividends instead of taking income.
Fund manager Sebastian Radcliffe joined Jupiter in 1997 and moved to the US desk in 1998. He has managed the Jupiter North American fund since January 2001 and will run the revamped mandate on a total return basis. He will invest mainly in blue chip companies that are capable of growing their earnings and producing a rising dividend. He thinks prospects for dividend growth are excellent, although average yields in the US are lower than in the UK.
According to Radcliffe, US companies have been showing strong growth in profits and balance sheets are in good shape, with gearing low and cash balances high. He says demand for income from an ageing population is rising and the favourable tax treatment of dividends is encouraging companies to grow their dividends, while reinvesting for growth.
When selecting stocks, Radcliffe combines a mixture of top-down and bottom-up analysis. He starts with a broad assessment of the investment environment to identify themes to play or avoid in the portfolio, but the decision to invest ultimately depends on the quality of an individual company.
Radcliffe looks at a company’s dividend growth, not its current yield, because he thinks it is usually well managed, strong businesses that commit to growing dividends over time.
This fund brings another option to the equity income party alongside UK, global, European and Japan funds available through various fund managers including Jupiter. However, investors who are looking to diversify away from the UK in their pursuit of income may prefer global funds that can tap into high dividend growth in regions such as Asia, while not being restricted to a single market.