Huge inflows fail to halt M&G Global Dividend
Stuart Rhodes has added more Alpha to his fund in the 15 months since it reached the £1bn mark than he did in the 32 months before.
By Mark Smith, Senior Reporter, FE Trustnet
Friday June 22, 2012
Mass inflows have done little to hamper the performance of the hugely popular M&G Global Dividend
fund, FE data shows.
FE Alpha Manager Stuart Rhodes’
portfolio has been one of the best-selling funds in recent years, raking in £1.7bn of inflows in the last 12 months alone.
While many funds suffer from growing pains as their managers struggle to find enough stocks with sufficient liquidity to house all the extra capital, Rhodes appears to have had no such problems.
In the period between the launch of the fund, in July 2008, and the point when assets surpassed £1bn, in March 2011, the manager added 7.11 per cent Alpha. Since then, he has generated 8.2 per cent.
Rhodes’ bottom-up stock-picking approach has seen the fund return 63.65 per cent over the last three years.
Only two of his peers in IMA Global
– Henderson Global Innovation and Morgan Stanley Global Brands – have performed better.
The average fund in the sector has returned 34.09 per cent during this time, while this figure is 42.17 per cent
for IMA Global Equity Income
M&G Global Dividend
is also a top-quartile performer over one year.
Performance of funds vs sectors over 3-yrs
Source: FE Analytics
Unlike its competitors in the Global Equity Income sector, which aim to produce a yield in excess of 100 per cent of the MSCI World index, M&G Global Dividend does not have a yield target.
Rhodes believes chasing yields is a dangerous approach and instead invests in companies that he believes have the potential to grow their dividend over the long-term, even from a very low level.
Back in September, FE Trustnet revealed that the funds with the highest yields in the UK Equity Income sector often struggle to maintain their performance over the long-term.
The current yield on the M&G Global Dividend fund is 3.52 per cent.
Rhodes is something of a rookie within the industry – M&G Global Dividend is the first fund he has headed up – but he is already being tipped as one of the fund managers of the future.
"Stuart Rhodes has had a bit of a helping hand, being part of a widely respected brand at M&G. He’s taken the helm of a global equity income fund exactly at a time when it has become incredibly fashionable," said AWD Chase de Vere’s Patrick Connolly.
"But in saying that, since then he has generated some really great performance and his approach is a bit different from similar strategies as it focuses on capital growth as well as dividend yield."
The manager has recently increased his exposure to financials and is now overweight relative to his peer group, having been significantly underweight six months ago.
He has added BlackRock and derivatives exchange-owner CME, while Prudential remains a significant position.
The fund has a TER of 1.68 per cent and an initial investment of £500.
Investors who are interested in a global equity income strategy may also want to consider the £2.5bn Newton Global Higher Income
Like Rhodes, FE Alpha Managers James Harries
and Robert Hay
also target stocks that appear likely to increase their dividend.
According to FE data the fund has returned 52.46 per cent over the last three years.