MAM Funds’ CF Midas balanced income fund is investing in global equity income for the first time.
The multi-manager previously built global equity exposure into the fund through country-specific funds but decided to invest in global equity income once it felt the managers in the sector had built up a sufficient track record.
Global equity income funds from M&G and Veritas were selected on the basis of their long-term approach. MAM Funds fund manager Alan Borrows has built only a small allocation to both funds, as the firm wanted to dip a toe in the water rather than take a big leap.
In contrast to the global equity holdings within CF Midas balanced income, UK equities are held directly. Borrows is focusing on big UK companies with strong balance sheets and an international presence.
These can tap into growth in developing markets, which is useful for Borrows given the low-growth environment he expects from the UK and other developed markets.
From a top-down view, Borrows expects the world economy to produce low growth rather than no growth. He does not expect a slip back into a double-dip recession as recent economic data has improved, especially in the US.
However, he remains concerned about sovereign debt issues and the knock-on effect on European banks. The recent announcement of how the eurozone is going to tackle the debt crisis he regards as helpful but not a solution.
Borrows says: “We are trying to take advantage of stresses in the system. For example, bank deleveraging will throw up some interesting opportunities to take advantage of pricing anomalies.
“You can put more money into the market using volatility to benefit from a lower price but we do not want to see markets gyrating around on a day-to-day basis as they did in August and September.”