Jason Pidcock’s five crown-rated Newton Asian Income portfolio appears in the top-10 holdings of 24 funds in the IMA universe.
Veritas Global Equity Income is a close second, appearing in 23.
Ten most popular funds among funds of funds
Source: FE Analytics
There has been a move towards global equity income funds in recent years, with a growing number of experts expressing concern at the over-reliance on a small number of dividend-payers in UK Equity Income funds.
One of the funds mentioned as a possible alternative by experts is Newton Asian Income.
FE Alpha Manager Toby Ricketts is clearly a fan of the £3.4bn portfolio.
He counts Pidcock’s fund as a top-10 holding in five of his funds – Premier Sentinel Enterprise Portfolio, Margetts Opes Growth, Margetts Opes Income, Margetts Providence Strategy and Margetts Venture Strategy.
According to FE Analytics, Newton Asian Income is the second-best performing portfolio in the IMA Asia Pacific ex Japan sector over three and five years – coming in just behind Aberdeen Global Asian Smaller Companies on both occasions.
Since the fund’s launch in October 2005, Newton Asian Income has returned 182.75 per cent, while the FTSE All World Asia Pacific ex Japan index and the sector have returned 141.44 per cent and 125.92 per cent, respectively.
It is yielding 4.18 per cent.
Performance of fund vs sector and index since Oct 2005
Source: FE Analytics
Newton Asian Income is the most-viewed factsheet on FE Trustnet over the last month and the sixth most-viewed over the last year.
There are two other popular funds in the IMA Asia Pacific ex Japan sector – Schroder Asian Income and Schroder Asian Income Maximiser. They are top 10-holdings with 11 and 10 funds of funds, respectively.
The most popular fund in the IMA Global Equity Income sector is FE Alpha Managers Andy Headley and Charles Richardson’s five crown-rated Veritas Global Equity Income portfolio.
Among the biggest admirers of the £2.2bn portfolios are FE Alpha Manager David Coombs, who has it in his Rathbone Multi Asset Total Return Portfolio, and FE Alpha Manager Bill McQuaker, who has it in his Henderson Multimanager Income & Growth fund.
Newton Global Higher Income – another constituent member of the IMA Global Equity Income sector – is the third most-held non-UK fund, appearing in the top-10 of 19 portfolios.
FE Alpha Manager Stuart Rhodes’ M&G Global Dividend fund features in the top-10 holdings of 14 funds.
It has a yield of 3.01 per cent and is a top-quartile performer in the IMA Global sector over three years, with returns of 42.35 per cent.
JPM US Equity Income is the only fund on the list that is part of the IMA North America sector. CF Marten is one of the 10 funds to count JPM US Equity Income as a top-10 holding.
Standard Life European Equity Income and BlackRock Continental European Income are the two representatives from the IMA Europe ex UK sector on the list. Both are held by eight funds of funds.
BlackRock Continental European Income was only launched in May 2011. FE Alpha Manager Will James’ five crown-rated Standard Life European Equity Income was launched in April 2009.
Over three years Standard Life European Equity Income is a top-quartile performer in the sector, with returns of 39.35 per cent. This beats its benchmark – the FTSE World Europe ex UK – which has returned 21.32 per cent over that time.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
The £1.2bn fund is currently yielding 4.33 per cent.
The most popular equity income portfolio from the IMA Japan sector is Simon Somerville’s Jupiter Japan Income; however only six funds count it as a top-10 holding.
Adrian Lowcock (pictured), senior investment manager at Hargreaves Lansdown, says investors should follow in the footsteps of these fund of funds managers and consider global funds for income.
"It is key to diversify your income stream," he said.
"What we have seen is that there is a greater appetite for equity income from other parts of the world and that stems from the history of the UK."
"Dividends have been very strong in the UK, but the key change has been where investors have got that income in recent years."
"Banks have dropped off the roster and the BP crisis in 2010 highlighted the concentration of investors in a small number of dividend-paying companies."
"Diversification is so important at the moment as we are in an age of austerity and low growth. Combine that with low interest rates on cash and bonds, and equity income seems to be the last man standing in many respects."
"I’m not surprised to see that Newton Asian Income is at the top of the list, because with that fund you are tapping into a strong savings culture that – like the UK dynamic – likes its dividends. Also, Pidcock has done an excellent job," he added.