Invesco Perpetual Global Equity Income fund
As more investors begin to appreciate the global opportunities for income Andy Parsons, head of investment research at The Share Centre, takes a closer look at the Invesco Perpetual Global Equity Income fund.
"As an investor in the UK, equity income has traditionally been provided by investing the financial services arena, oil, utilities, tobacco and telecom companies. However, global equity income fund allows for sector and income diversification. For example the US is a market leader in the information technology arena, as well as being innovative in the automobile market along with Germany and Japan, whereas Denmark is innovative in energy development via wind power.
"A global fund should provide investor's access to the companies in the sectors and assets that a home market bias cannot deliver directly.
"Traditionally investors looking overseas for income initially looked to Europe and further afield to Asia, whilst in more recent times opportunities have been sought from the increasing number of global equity income funds.
"A key component of these funds is the US - not historically known for its income opportunities. However, investors will be surprised to see that for many global equity income funds, this arena will generally account for around 30 - 45% of a portfolios underlying holdings.
"The US increasingly offers investors income diversification, a higher concentration of income opportunities and domiciled companies that are recognised for having established dividend policies. The US also has a large number of global brand leaders within its boarders, most of which tend to have overseas interest.
"Global investing is not without potential issues such as currency risk. However, some might say that currency trading is a zero sum game: if one currency falls in value another must rise. Some fund managers do hedge this risk, but this may not always work out as intended and are made ever more complicated when the company the fund invests in employs active currency hedging through its worldwide services and products.
"Invesco Perpetual's Global Equity Income fund looks to generate a rising level of income, together with long - term capital growth, investing primarily in global equities.
"Managed by Paul Boyne and Doug McGraw, the funds strategy is to look to identify those global companies where the mangers firmly believe the valuation is attractive and that the company can sustain profit margins and deliver the necessary returns through the economic cycle, whilst maintaining and growing the dividend. This approach will lead them to those companies that are high quality and that generally have a strong franchise.
"The fund will generally hold around 60 stocks which the fund managers believe meet the outlined principles mentioned above. At the time of writing, the fund's largest geographical exposure is to the US, along with strong representation in the UK, Switzerland, Japan and France. In terms of sector exposure, the fund has consumer discretionary, health care, industrials and consumer staples as its top four sector weightings."