Haynes says the firm has recently sold out of M&G Global Dividend and significantly reduced holdings in Newton Global Higher Income fund in favour of Artemis Global Income.
The five-crown rated fund has been headed up by de Tusch-Lec (pictured) since its launch in July 2010, and already attracted over £1bn in assets.“He could be the next Woodford of global equity income,” Haynes said.
Chelsea Financials’ Darius McDermott rates the fund as well.
“We like it. It’s had a really good start. It’s a really solid fund and it’s been in the right places. There’s 20 fund or so in the IMA Global Equity Income sector and it’s one of the standout fund for me,” he said.
The fund has been a standout performer in the IMA Global Equity Income sector over its history, and is the best performing fund in the sector over the last three years, with returns of 68.48 per cent. The MSCI World index has gained 45.58 per cent while the average fund in the sector has made 45.90 per cent.
Since launch, the fund is up 81.39 per cent, about 30 percentage points more than the sector and index.
Performance of fund, sector and index since July 2010
Source: FE Analytics
So far this year, Artemis Global Income is significantly ahead of its peers, gaining 6.07 per cent, according to FE Analytics.
The fund aims to achieve a rising income combined with capital growth. It is currently the eighth highest yielding fund in the sector, at 3.8 per cent.
The highest yielding Global Equity Income fund is the four-crown rated Liontrust Global Income, run by James Inglis-Jones and Samantha Gleave. It has a natural bias towards the UK, and is currently yielding 4.85 per cent.
As highlighted in a previous FE Trustnet article, De Tusch-Lec is not afraid to look beyond the staple income-payers in the UK that global managers are often guilty of leaning on in their portfolio.
Artemis Global Income currently has just 8 per cent in the UK, making it a strong candidate for investors who truly want to diversify their equity income exposure.
Taking a look at the manager’s top-10 holding, you won’t see the names you’ve come to expect from a run of the mill defensive global equity income fund. Instead, the manager favours stocks like Chicago-based pharmaceutical company AbbVie, US truck rental company Ryder and even Greek gaming and sports betting company OPAP.
Haynes says he likes de Tusch Lec’s “pragmatic” approach, in that the manager is willing to invest in both growth and value opportunities, depending on how he views the market.
The manager himself issued a warning on “bond proxy” stocks last month, explaining that he’s shifted his portfolio away from stocks and sectors with bond-like characteristics with mid-caps – particularly in the US.
“He recognises when the market favours growth or value,” he said. “And at £1bn, the fund still has plenty of scope for scalability,” said Haynes.
Size was the major determining factor in booting out the £9bn M&G Global Dividend fund from Whitechurch’s portfolios, according to Haynes.
“It doesn’t really matter what they [M&G] say, you can’t deliver the same kind of performance at that size,” he said.
Though the fund benefits from the expertise of FE Alpha Manager Stuart Rhodes at the helm, the portfolio has swollen to nearly £9bn in size, taking on roughly £1.3bn in the last 12 months alone. Artemis Global Income took on around £680m over that time.
While M&G Global Dividend has a solid long term track record, the portfolio has had a dip of form in recent months.
Over the last year, the fund has returned 2.44 per cent, putting it in the third quartile of the sector.
Performance of fund vs sector over 1yr
Source: FE Analytics
The fund also has a lower dividend yield than its Artemis counterpart, at 3.16 per cent.
While Whitechurch continue to hold the Newton Global Higher Income fund, Haynes says the firm have reduced their holding due to Newton’s ultra bearish view of the market.
However, as Haynes’ colleague Ben Willis highlighted earlier this week, the cautious portfolio is a good one to hold for downside protection, and sits alongside the more growth-oriented Artemis Global Income fund in investors’ portfolios.
The £4.25m fund is run by James Harries and Nick Clay and has a dividend yield of 3.75 per cent.
The fund has performed broadly in line with the FTSE World index over the last three and five years, but the managers’ more defensive approach has seen it lag over the last 12 months. Global Higher Income is up just 2.38 per cent compared to 4.9 per cent from the sector. The index is up even more, at 6.72 per cent.
Performance of fund, sector and index over 1yr
Source: FE Analytics
Artemis Global Income has ongoing charges of 0.87 per cent, making it slightly more expensive than the Newton portfolio, which has charges of 0.8 per cent, but cheaper than M&G Global Dividend, which has charges of 0.91 per cent.
Eight funds in the IMA Universe hold De Tusch Lec’s portfolio in their top-10 holdings, including David Coombs in the Rathbone Multi Asset Total Return portfolio.
