Jupiter European Income to target yield of 3%

Jupiter will be launching its European Income fund on 8th May with a target income yield of 3% net.

The Fund, which has received FSA approval, is the latest in the Group’s expanding suite of income products, launched in response to the global trend towards dividends and the rising demand for income among investors.

Malcolm Millar, who will manage the new Fund on a total return basis, will focus the portfolio on established companies that can grow their dividends and are trading on attractive valuations. The Fund will typically hold between 60 and 90 stocks and will have a bias towards large and medium-sized companies.

Malcolm believes the outlook for dividend growth in Europe is excellent. He says: “UK investors have tended to focus too much on Europe’s political problems. In reality, however, profits growth across the continent has been strong and the dividend culture is becoming firmly entrenched. There is a broad and well diversified range of companies in continental Europe that can sustain strong profits growth and grow their dividend payments over time.”

Malcolm believes that some of the best opportunities in Europe currently lie in the financials sector. He says: “European banks look good value. Many companies in the sector enjoy strong domestic franchises while also benefiting from overseas expansion. UniCredito, for example, has a leading domestic franchise in Italy but should also benefit from improving conditions in Germany and its strong footprint in Eastern Europe.”

The consumer sector also offers opportunities. Malcolm explains: “There are increasing numbers of wealthy consumers whose discretionary spending is relatively unaffected by short term economic concerns. This trend applies to both developed and emerging economies and luxury goods companies such as LVMH are well placed to exploit it.

There will be an initial fee of 5.25% for investments into the Fund and an annual management charge of 1.5%, which will be deducted from capital.