Jupiter plans North American Fund reconstruction

Jupiter is planning to restructure its £13.5m North American Fund in order to provide investors with an income stream.

The proposals, which are subject to unitholder approval, will involve amending the investment objective to include the aim of investing for income as well as long-term capital growth and changing the Fund’s name to the Jupiter North American Income Fund.

The treatment of expenses will also change. If unitholders vote in favour of the proposals, charges will, in future, be taken from capital rather than income. Jupiter will, in addition, introduce accumulation units, enabling investors to automatically reinvest dividends if they do not require income.

Jupiter, which has established a strong reputation for managing income funds during the past 20 years, intends to restructure the Fund as it believes the case for investing internationally for income is growing. It has, as a result, been extending its suite of income products, with products such as the £139m Jupiter Japan Income Fund and Jupiter European Income Fund, scheduled for launch in May, joining more established names such as the £4.2bn Jupiter Income Trust and £744m Jupiter High Income Fund. The North American Income Fund will be the third international income fund in Jupiter’s range.

The Jupiter North American fund has established a strong track record under the management of Sebastian Radcliffe. During the past three years, the Fund has returned 24.85%, compared with 23.53% for its benchmark, the S& P 500, and 20.93% for the IMA sector average, placing the fund 18 out of 69 funds in the sector.

Like other funds in Jupiter’s income range, Sebastian will run the North American Income Fund on a total return basis, investing in companies that are capable of both growing their earnings and producing a rising dividend. He says: “Yields in the US are currently around 1.9%, compared with around 3.4% in the UK. However, the prospects for dividend growth are excellent.

“Companies have been enjoying strong growth in profits and corporate balance sheets are in excellent shape, with gearing low and cash balances high. This, combined with the rising demand for income from an ageing population and the favourable tax treatment of dividends, is encouraging companies to grow their dividends while continuing to reinvest for growth. With current forecasts of around 10% dividend growth for 2007, the outlook for US income investors is excellent.”