Europe has been overlooked as an income-producing region, according to The Share Centre’s Andy Parsons (pictured right).The advice team manager says global income funds – including those that focus on Asia and emerging markets – have just arrived on investors’ radars, overshadowing investment vehicles with a preference for high-yielding stocks closer to home.
"There are some impressive global-reaching companies which are based in Europe, and those can add value to an investor’s portfolio," he said.
Financial Express data shows the Schroder ISF Emerging Europe Debt Absolute Return fund is the best-performing income or growth-and-income fund with at least 50 per cent exposure to Europe, returning more than 30 per cent in the past three years.
Marlborough High Yield Fixed Interest was another strong performer, returning 28.53 per cent over three years. The average Europe-focused fixed income fund returned just shy of 19 per cent in the period.
Performance of fund vs sector over 3-yrs
Source: Financial Express Analytics
Parsons also points to the US as a strong area for investors seeking income.
A Financial Express filter for income or income-and-growth funds with at least 50 per cent in the US shows that all funds in the bracket have produced strong double-digit returns over three years.
The best performer of the population is the $5.7bn Schroder ISF Global High Yield fund, run by Wesley Sparks. The fund favours junk bonds, and has just a little over 10 per cent in investment grade debt, according to Financial Express data. The fund has a 74.2 per cent weighting to North America.
The worst performer in the population over three years is Baring High Yield Bond, which has 69 per cent in North America and again favours non-prime investment. It still managed impressive returns of 28.7 per cent over the period.
The average return from a US-focused income fund was 36 per cent over three years.
By contrast, the average UK income or income-and-growth fund has returned 14 per cent over three years. The best performer was Unicorn UK Income, with 60 per cent returns in the period.