When a new fund launches, there is always a period of reflection from the rest of the industry as they wait to see if the product is viable.
Sometimes, it is a case of the innovator being overtaken by the mimickers but in this case, the slow trickle of global equity income funds seem to have found their own space and there is room for more.
The latest to the market is JPM’s global equity income fund. We are advised that this fund has a two-year track record in a different guise offshore, with £350m under management using the same process.
So the fund has form but we especially like the fact that manager Gerd Woort-Menker has no constraints on where he can invest the 40-70-stock portfolio.
He aims for a growing yield – currently 4 per cent – and invests where he sees value and given that the macro arguments for looking away from the UK yield are strong, he should not struggle to find suitable companies.
According to the JPM research, over 400 stocks in Europe alone now yield more than the bond market so the conditions for launching a fund like this are favourable.
Another consideration for a global fund is its currency risk but JPM’s will be minimal because it will primarily be hedged into sterling. It has competitors in Newton global higher income and Neptune global income but a bit of competition is a good thing so we will be watching all these funds closely.
Darius McDermott is managing director of Chelsea Financial Services.