US asset manager Legg Mason has merged its UK income fund into a global income product due to concern about the FTSE’s ability to deliver income for investors.
The £7.6m Legg Mason UK income fund, which was being run by quantitative unit Batterymarch, has been merged into the £7.2m Legg Mason global equity income fund run by qualitative subsidiary Global Currents.
The group says the number of equities in the UK that deliver attractive levels of yield have dwindled. UK yield has suffered from setbacks including the crisis in the banking sector, which has seen all UK banks halt dividend payments, and the oil spill that forced BP to cut its payments.
Legg Mason Europe head of investment communications Andrew Burchill says research has shown that just seven of the top 100 stocks for income in the MSCI world index now reside in the UK.
He says: “We believe global companies are paying higher dividends and they are also offering higher growth and capital appreciation.”
Whitechurch Securities senior analyst Ben Seager-Scott says the move might also be for corporate reasons.
He says: “The UK equity income space is very competitive and although I think of Legg Mason as being a leader in some asset classes, UK equity income is not one of them.”