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Oliver’s twist

Oliver Russ, manager of the Resolution Argonaut European income fund, was the first fund manager to recognise the huge opportunities in this sector.

The fund was launched less than 18 months ago and over the year to March 1, 2007 is already fifth out of 87 European trusts, having risen by 14 per cent against the sector average of only 7 per cent.

Even more important, however, is the yield. This trust has distributed an income of 4.74 per cent in the year to March 1, 2007 against yields on the other leading European trusts of between nil and 0.6 per cent. The current yield is 4.2 per cent.

The problem for the best UK equity income funds is that nearly all of them are very big and there are only around 120 eligible stocks in the UK whereas there are around 360 such stocks in Europe and there is far less competition for high-yielding stocks.

Russ believes the relative youth of the European equity income market closely resembles the UK market of a decade or so ago. He feels that European income shares will be a mainstream asset class in five to 10 years but, as ever, the early investors will see the best returns.

The fund generally holds around 30 to 50 stocks. These include value stocks which have a high dividend yield yet have scope for appreciation as well, growth stocks which have a high earnings’ growth rate but no need to retain capital and hence rapidly grow payouts to shareholders and also special situations where dividends might currently be low but have significant scope to increase as a result of restructuring or other corporate action.

I believe this fund should be a real winner and outperform the whole of the UK market as well as low-yielding European shares. This fund is a must for all income portfolios.


Date with destiny

A-Day introduced the concept of pension input periods and it is vital that advisers are aware of the opportunities and pitfalls they present.

NU pension business slows down

Norwich Union has seen a drop in pension sales as the A-Day effect began to wear off with total pension sales down to £1.14bn in the first quarter compared with £1.27bn in the same period last year. Overall UK sales rose to £3.5bn from £3.2bn in 2006.

Stop the cold-calling

Royal London is pleased to support the petition calling for a ban on cold-calling for pension and investment products. The petition, launched by IFA Darren Cooke of Red Circle Financial Planning and hosted on the Parliamentary website, calls on the Government to ban cold-calling for pensions and investment products. A similar ban is already in force […]


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