Aim: Income and growth by investing in European companies excluding the UK
Minimum investment: Lump sum £1,000
Investment split: 20.5% France, Germany 15%, Switzerland 14.2%, Spain 12.2%, Italy 10.3%, Greece 7.5%, Finland 5%, Netherlands 4.5%, Austria 4%, Norway 2.8%, Denmark 1.5%, Belgium 1%, Ireland 1%, Sweden 0.5%
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7203 3333
Scottish Widows Investment Partnership’s European income fund invests in a portfolio of 30-50 stocks to take advantage of the attractive dividends being paid by companies in Europe.
Bright Financial Services sales director Paul Breaks says: “The Swip European income fund aims to offer the potential for a high and growing income as well as capital growth from continental European companies. The target yield is 3.5-4.5 per cent a year from companies that provide a consistent and growing yield.”
He also observes that the portfolio will be unconstrained and can invest across geographical markets, sectors and stocks. He adds that the charges are average.
“Given the income story holds as much truth today as it ever did, the fact that companies abroad have begun to see the benefits of increasing dividends has to be welcomed and provides the opportunity for UK based investors to diversify without foregoing their income requirements,” says Breaks. He feels that the emergence of global property funds has provided the same diversification options in property. “The yield objective of the Swip fund is attractive and the re-emergence of Germany certainly merits investment consideration on its own. I like the fact that the fund is unconstrained,” says Breaks.
Considering the potential drawbacks of the fund Breaks says: “I am not a fan of insurance company funds. As with the ever growing and developing third party fund links, the performance comparisons invariably do not bear scrutiny. However, the European income fund competition is thin on the ground, giving Swip the chance to steal a march.”
Summing up Breaks says: “Given dividends are growing in Europe and the fact that there are many first class companies who will benefit from the Bric factor alone make this fund worthy of consideration. It provides diversification to clients who normally might be wary of investing in Europe from a growth prospective.”
Suitability to the market: Good
Investment strategy: Good
Adviser remuneration: Average