Aim: Income and growth by investing in a portfolio of global equities
Minimum investment: Lump sum 1,000, monthly 50
Investment split: 31.4% Asia Pacific ex Japan, 27.8% Europe ex UK, 13.4% UK, 13.1% US, 6.7% Latin America, 3.8% Japan, 3.8% cash
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4%, annual 1.5%
Special offer: Initial charges reduced to 3%
Offer period: Until November 30, 2005
Commission: Initial 3%, renewal 0.5%
Tel: 0500 660000
Newtons Global Higher Income Fund is an Oeic that aims for income and growth by investing in a portfolio of global equities. Stock selection will be driven by themes and there will be a strict buy and sell discipline based on prospective yields.
Bright Financial Services sales director Paul Breaks says: British investors, as we know, like income. I understand there is currently 36 billion invested in UK income funds. To date, this reliance on the home market is understandable, as up until now there have been very few funds which offer attractive yields and international diversification.
However, he believes that such dependence on one market is not ideal. He points out that this fund aims to provide diversification and take advantage of the opportunities that now exist worldwide.
Surprisingly enough, the most attractive yields can now be found in Europe, Asia and Latin America as companies become far more responsive to the needs of their shareholders, namely in the form of dividends. Currently 90 per cent of stocks yielding more than 3 per cent are outside the UK. says Breaks.
According to Breaks, Newton has a good equity income track record and aims to generate a 4 per cent yield payable quarterly with this fund. More importantly the fund will aim to achieve increasing annual distributions, together with long-term capital growth through a concentrated portfolio of between 60-80 stocks. he says.
Breaks then highlights the strict buy/sell criteria which will be imposed as a good feature. Only stocks delivering 50% yield premium to the index may be considered. Should a selected stock yield fall to a 25 per cent premium it will be sold, he says.
While there is nothing major that Breaks dislikes about this product, he notes that the stockpicking process means the portfolio is heavily weighted to the Far East and Europe. Therefore it is not for first time buyers, he says. Plus currency risk is always a factor to take into account with international funds.
Scanning the market for possible competitors Breaks says: Other than UK income and bond funds, I dont believe there is much in the way of direct competition.
Summing up Breaks says: I think Newton is on to a real winner here. The strict yield discipline, the intention to increase the yield and quarterly payments from investing in companies that are also in the potentially most rewarding growth markets make this the most exciting fund I have yet reviewed.
Suitability to market: Good
Investment strategy: Good