In this Hardman Talks, Riccardo Bindi and Keith Hiscock discuss their note on Equity Income – UK or Global?
The UK Equity Income sector (UKEI) is the fourth largest investment company sector, with £10.5bn of assets, and the traditional home for investors looking for income in the equity market. The UKEI not only provides investors with a better dividend yield than the general UK market, but also has a strong track record of dividend growth. Indeed, many funds feature on the Association of Investment Companies’ “Dividend heroes” list for the number of years of consistent growth. The UKEI is also marked by the longevity in the role of many of the fund managers, and has some of the longest established funds.
The note asks whether there is justification for investors seeking income to consider three other sectors, Global, Global Equity Income and Asia Pacific Equity Income. Some investors might want to consider investing part of their portfolios in non-UK funds to diversify their risk, others might think of them as replacements for the UK. The global income funds benefit from the ability to fish in a wider pool of possible holdings than the UKEIs. They also give the investor currency exposure. Another reason to consider the global funds is their superior share price performance over ten years. Finally, though the starting yield is lower than the UKEI sector, these global funds have, historically, seen faster dividend growth.
The two questions we seek to answer are: why would you still want an income fund, and if you do want to invest in one, should you consider a global fund as well as a UK one?
Watch the video now to find out more.