Threadneedle adds eighth Equity Income Fund

Threadneedle plans to launch this week its eighth equity income fund, the Global Equity Income Fund, to be managed by Steve Thornber.

The new Global Equity Income Fund is to launch on 27th June. It will typically invest in between 75 and 95 companies at any time, providing a good level of diversification by market and sector.

Steve Thornber, manager of the Threadneedle Global Equity Income Fund said: “I have no preconceptions about markets or sectors. As a member of the Global Equity Team I am in close contact with all of the geographical desks as well as Threadneedle’s global sector teams. I also research and screen stocks myself. I am looking for quality and value and I am looking to hold stocks for the long term to benefit from their ability to grow their dividends.”

The portfolio is benchmarked against the MSCI All Countries World Index, a broad index closely representing world equities, but it is unconstrained in the positions it can take.

Thornber added: “I believe that of all of the world’s markets, Europe, the UK and Asia currently offer the best income potential, so the fund is going to be tilted towards those markets. Conversely, the US and Japan are both big markets but their dividend yields are relatively low. We will be taking advantage of some stock specific opportunities in those markets but the fund will be underweight relative to the MSCI World Index.”

In terms of sectors, Thornber is combining the need to generate income with his own view of the world: "There are certain industries that typically produce high dividends, such as utilities and financials, so those will be well represented. I will also be targeting sectors that can generate good capital growth, so basic industries will be a meaningful position. This sector is a real beneficiary of the strong growth we’re seeing in China, as well as globally. It is also showing signs of strong dividend growth. Areas where we will be below benchmark weight include the low dividend sectors such as technology and industrials."

Threadneedle has a strong pedigree in managing equity income funds and offers a broad range of options, from lower risk products paying income six-monthly, through monthly-distributing equity funds and portfolios combining equities and bonds, to the more concentrated UK Equity Alpha Income Fund.

Head of UK Equities, and manager of the UK Equity Alpha Income Fund, Leigh Harrison has developed a very strong reputation in the industry as one of the most astute and successful managers of equity income products. Leigh holds a Citywire A rating and along with his UK team will be a key input into the Threadneedle Global Equity Income Fund.

The European equity income market is younger than its UK counterpart, and, as an early entrant to this area, Threadneedle has built a very strong position. The Pan European Equity Dividend Fund was launched in May 2006 and is managed by Chris White. It outperforms its benchmark index (IMA Europe including UK) and peer group over one year to 31 May 2007*. Chris has 17 years of experience and a highly coveted AAA-rating from Citywire.

Threadneedle’s outlook for global equities is positive. Thornber commented: “Economic growth continues at decent levels in the west, while Japan is recovering nicely and China continues to grow at a robust pace. Inflation appears to be under control and this will limit the need for further increases in interest rates. Reasonable valuations and cheap financing mean that the M& A wave should continue to underpin the market.”

Jeremy Podger, manager of the Threadneedle Global Select Fund, will deputise to Steve. Threadneedle established a dedicated global equity team in 2003 and, since that time, it has delivered top returns to its investors. The flagship Threadneedle Global Select Fund, managed by Jeremy Podger, has comfortably outpaced its benchmark (IMA Global Growth) over the past three years.