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The cheapest Global Equity Income funds for your portfolio

27 March 2014

In the next article in the series, FE Trustnet looks at the cheapest funds under the new pricing regime in the hugely popular Global Equity Income sector.

By Thomas McMahon,

News Editor, FE Trustnet

The top-performing Artemis Global Income funds is among the cheapest global equity income funds available on a clean share class basis, according to the latest FE Trustnet research.

Jacob de Tusch-Lec’s £595m portfolio has five FE crowns and is top quartile over one and three year periods in the IMA Global Equity income sector, according to our data.

The fund has clean share class ongoing charges of just 0.885 per cent, making it one of the cheapest 10 funds in the sector.

Over three years it has returned 46.81 per cent as the average fund in the sector has made 30.04 per cent, according to data from FE Analytics.

Performance of fund vs sector and index over 3yrs


Source: FE Analytics

The fund was launched in July 2010 so only achieved three year track record last year and has seen a surge of inflows since then, more than doubling from £290m to its current size. Many IFAs and wealth managers will only use a fund once it has a three year track record.

It current largest position is in the eurozone, where it is 27.6 per cent invested, while it also has 25 per cent in the US and 18.4 per cent in Europe. It yields 3.9 per cent and, like all funds in this article, is available through Trustnet Direct.

The absolute cheapest fund, Baillie Gifford Global Income, has a less distinguished track record, returning bottom quartile returns over three years of 21.57 per cent. The fund has ongoing charges of 0.71 per cent, and also yields 3.9 per cent.

Dominic Neary’s £291m portfolio has large positions in miner Rio Tinto and Imperial Tobacco as well as Roche and Microsoft. It has 24 per cent in financials and 17 per cent in industrials.

The £329m Lazard Global Equity Income fund is marginally more expensive at 0.8 per cent. The fund is run by Patrick Ryan, Andrew Lacey and Kyle Waldhauer and has produced third quartile returns over three years of 25.57 per cent.

It yields 3.7 per cent and has 30 per cent in financials and 18.8 per cent in technology and telecoms. The fund has 30.3 per cent in North America and 28.4 per cent in continental Europe, with just 5.6 per cent in the UK, suggesting it could be a decent diversifier for a UK investor.

Performance of funds vs sector over 3yrs


Source: FE Analytics

Newton Global Higher Income is another fund to come out extremely cheap under the new pricing regime.

The fund is a favourite of cautious investors, and has lagged behind many of its peers over the past 12 months as cyclical and aggressively positioned funds have prospered.

The most popular global equity income fund is M&G Global Dividend, which doesn’t actually sit in the equity income sector.

FE Alpha Manager Stuart Rhodes’s £8.9bn fund has taken in more than £4bn in new money over the past 12 months.

The manager has kept his fund in the IMA Global sector to have a freer hand when it comes to the income he has to produce. It currently yields only 2.95 per cent, which may not be enough for some investors.

Rhodes’ fund is also one of the cheapest available, with ongoing charges of just 0.91 per cent on the clean share class.

On a total return basis it has returned 35.12 per cent over three years, which would put it in the top quartile of the global equity income sector.

Performance of fund vs sector and index over 3yrs


Source: FE Analytics

It would also have been top quartile over five years and the leading portfolio in the sector over 10.


Source: FE Analytics

In total 31 funds offer a clean share class with charges of less than 1 per cent out of 102 in the sector.

FE Trustnet looked at the cheapest funds in the UK equity income and UK smaller companies in recent articles.


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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.