With total economic uncertainty and turbulent markets, some advisers and investors argue that your best option is a broad fund that covers many areas rather than a sector specialist such as a financials fund. If you want both exposure to financials but the relatively safer option of a broader fund, then Threadneedle Global Equity Income Fund might be a good option.
This fund is globally and sectorally very well diversified, but its largest sector allocation is financials, which account for nearly a fifth of the fund. It is also an equity income fund so its holdings include larger, stable, high-yielding companies, which typically hold up better in volatile markets - for example, insurance companies such as top 10 holding Admiral Group.
The fund has performed strongly since its launch just over four years ago, so its total returns are well within the top 25 per cent of performing funds. It also offers a very generous yield, currently around 5.8 per cent, a good option both for outpacing inflation and giving you something back even as markets fall.
The fund aims for a high and growing income over the long term as well as capital growth. Manager Stephen Thornber selects stocks according to the individual merits of the company and sector rather than by geography, and key selection criteria include:
• higher than average dividend yield;
• robust dividend cover;
• good potential for dividend growth; and
• profitable business model with a focus on free cash flow generation.
The fund also has the option of investing up to a third of its assets in derivatives, although it does not currently do this.
THREADNEEDLE GLOBAL EQUITY INCOME Retl GBP Inc (GB00B1Z2MW38) | |||
PRICE: | 89.35p | SHARPE RATIO: | 0.34 |
SIZE OF FUND: | £64.57m | 6-MTH ANNUALISED PERFORMANCE: | -10.39% |
No OF HOLDINGS: | 100* | 1-YR ANNUALISED PERFORMANCE: | 0.08% |
SET UP DATE: | 27 June 2007 | 3-YR ANNUALISED PERFORMANCE: | 7.69% |
MANAGER START DATE: | 27 June 2007 | TOTAL EXPENSE RATIO: | 1.71% |
TURNOVER: | 68%* | YIELD: | 5.81% |
ABSOLUTE VOLATILITY: | 17.17%* | MINIMUM INVESTMENT: | £2,000 |
TRACKING ERROR: | 5.22%* | MORE DETAILS: | threadneedle.co.uk |
Source: Morningstar & *Threadneedle.
Performance data as at 27 September 2011.
Top 10 holdings as at 31 August 2011
Holding | % |
BP Prudhoe Bay Royalty Trust | 2.2 |
Novartis | 1.7 |
BP | 1.6 |
Imperial Tobacco | 1.4 |
Linn Energy | 1.4 |
Crescent Point Energy | 1.4 |
Admiral | 1.4 |
HTC | 1.4 |
Royal Dutch Shell | 1.3 |
Chunghwa Telecom | 1.3 |
Sector breakdown | Percentage |
Financials | 18.5 |
Telecom services | 12.1 |
Energy | 11.5 |
Materials | 10 |
Consumer staples | 9.9 |
Consumer discretionary | 9.1 |
Utilities | 8.9 |
Healthcare | 6.9 |
Industrials | 6.4 |
Information technology | 3.5 |
Unclassified | 0.7 |
Cash | 2.5 |