Global income - spread your net wider
One implication of ageing implications (as well as too much debt) is governments (and companies) reneging on promises made yesteryear on pensions (among other things).
The result is growing demand, for many years to come, for reliable sources of income. And this began to move prices in 2011.
For example, the big global brands with juicy dividends (pharmaceutical, tobacco), outperformed by a good margin in 2011. As did the funds heavily invested in these sectors, like Invesco Perpetual Income.
Spread your net wider
There are some outstanding UK equity income funds, but to invest solely in the UK is to miss out on some fantastic potential. For example:
No. of companies with yields in excess of 3%:
UK stock market 123
World stock markets 879
With more than 7 times as many opportunities around the globe. You must spread your net wider.
We like geographically focussed funds, such as those invested in Asia, as we considered earlier.
There are also outstanding funds with a global mandate. Here are some excellent examples:
Newton Global Higher Income (net yield 4.7%) has been a stalwart since launch in 2005. M&G Global Dividend was launched with a different approach; a lower yield of 3.5% has been coupled with outstanding capital growth.
More recently, in July 2010, Artemis Global Income (4.5% net yield) was launched. We don’t often recommend new launches, but we felt this one had an edge, being prepared to buy stocks not often featured amongst its peers. The net result has been outperformance against most of its peers,
Fidelity new launch
Fidelity Global Dividend is being launched as
we go to press. It has something of the feel of the Artemis fund - a talented manager, a clear focus, a willingness to do things a bit differently
It will have about 50 stocks and an anticipated yield of 4%. As with the Artemis in 2010, Fidelity Global Dividend is one to consider from launch. It will be looking to exploit the attractive dividend growth opportunities highlighted below.