Sheridan Admans, investment adviser at The Share Centre, explains how investors seeking income can benefit from considering a global fund, focusing on the M&G Global dividend fund.
"Global funds demonstrate portfolio diversification of assets, regions and sectors. 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.
"Therefore, the utilisation of a global fund in an investment portfolio should potentially provide access to the best companies in the sectors and assets that a home market bias can not deliver directly.
"The M&G Global Dividend fund has a short investment history as it was only launched in July 2008, however we believe the fund's simple investment strategy is very compelling.
"Fund manager, Stuart Rhodes, is supported by M&G who have a history of delivering good long-term returns in many of their investment funds and employ some of the best investment managers in the industry.
"Approximately 50 stocks are held and the manager aims to choose the best income-producing opportunities across the world, believing that dividends and share price performance go hand in hand. He will look for companies that are disciplined in their approach to capital and dividends, and have a record of dividend growth which he believes is sustainable. He will then see how cheaply he can buy those companies.
"Global income investment not only provides access to a greater range of dividend-producing companies, but also true diversification across multiple business models, geography and sectors.
"Historically, investors would generally have sought equity income from the funds available within the UK Equity Income sector. However, in order to ensure portfolios are diversified we believe that investors should now look to consider a combination of both UK and Global equity income funds. This is providing they are willing to accept a medium degree of risk."
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