Top 100 Funds 2019: Global Equity Income

Troy Trojan Global Income (GB00BD82KQ40)

Troy Trojan Global Income only launched in November 2016, but its manager, James Harries, generated strong total returns and an attractive income while running Newton Global Income (GB00B8BQG486) between 2005 and 2015. And so far this fund’s total returns have been good: over one year to the end of July it is well ahead of broad global indices such as MSCI AC World and FTSE All World, and the IA Global Equity Income sector average. However, it has a lower yield than many of its sector peers.

Trojan Global Income aims to provide income with the potential for capital growth over the medium term. When putting together its collection of investments Mr Harries considers companies’ individual merits and Troy Asset Management’s view on broader economic and industry factors. He seeks high-quality shares at a good price, focusing on businesses that make high returns on capital employed, with the aim of avoiding permanent capital loss and sustaining long-term income growth. He looks to hold them for the long term.

The fund is fairly concentrated: it aims to hold between 30 and 50 investments and at the end of July had just 35, which could make it more volatile. Consumer companies' shares accounted for over 40 per cent of its assets at the end of July.

Artemis Global Income (GB00B5N99561)

Artemis Global Income has historically made strong total returns, but has lagged broad global indices and its peer group average over the past few years, so its cumulative total returns do not look good. However, this is in part due to the fund having relatively lower exposure to the US than broad global indices, with only 41 per cent of its assets in this market at the end of June (see more on this in The Big Theme of 16 August). And its manager, Jacob de Tusch-Lec, invests via a value and contrarian approach – methods of investing that can undergo periods of underperformance.

“Artemis Global Income has had a bad [period], but is well placed to ride a value revival,” says Mr Liddell.

Mr Morgan adds: “This fund has a pragmatic, well-rounded approach and a decent long-term track record of strong returns, although its value-orientated approach has been a headwind recently. Its more eclectic approach offers some variety and diversification to an income portfolio.”

The fund is a good diversifier from UK equity income funds because it has low exposure to the domestic market. It is also differentiated from some other equity income funds in that it favours large and medium-sized companies, rather than megacaps.

The fund has a lower yield than a number of its Global Equity Income sector peers, at around 3.1 per cent, because it aims for capital gain as well as a steady and rising income. Mr De Tusch-Lec favours companies that can keep growing their dividends over time rather than the highest yielders.

Fidelity Global Dividend (GB00B7778087)

Fidelity Global Dividend doesn’t always keep up with its peers in the IA Global Equity Income sector because it is typically more defensively positioned, but it has made good long-term total returns and in difficult years tends to outperform. In 2018, for example, it made a positive return of 2.18 per cent, in contrast to the IA Global Equity Income sector average fall of -5.83 per cent, and negative returns for broad global indices. So over the 12 months to the end of July it was well ahead of these benchmarks.

The fund’s manager, Daniel Roberts, manages risk conservatively, focusing on companies with predictable, consistent cash flows and simple, understandable business models with little or no debt on their balance sheets. When considering potential investments he places a large emphasis on the sustainability of a company’s dividend and whether its current share price provides an adequate margin of safety. He mostly invests in large companies.

“Fidelity Global Dividend is a well-diversified, lower-risk fund that may suit investors seeking a stable, and potentially rising, global income,” say analysts at FundCalibre.

Murray International Trust (MYI)

Murray International Trust has not performed well in recent years, although prior to 2013 had a strong record of outperformance. A number of the panel favoured keeping it and manager Bruce Stout’s bearish outlook and resulting positioning might come into its own in the near future as global markets face a number of challenges.

“The trust has endured a tough period of relative returns,” says Mr Morgan. “[But it has a] benchmark agnostic style with structurally high active share and low fees. Disappointing recent performance is a result of the value tilt, sector allocation and geographic skew towards Latin America and away from the US. This performance has not changed my view of Bruce Stout and the consistently applied investment approach. His multi-cycle experience should count for a great deal during the next phase of the stock market.”

Murray International’s performance has bounced back in the past after difficult periods, and in the meantime investors benefit from an attractive income stream. The trust’s board has a progressive dividend policy and it has increased its dividend every year for 14 years. It had revenue reserves worth over a year’s dividends at the end of its last financial year, according to the AIC.

It also has a relatively low ongoing charge of 0.69 per cent and this could fall because the trust’s board has recently reduced the fees it pays the manager. Last year it paid 0.575 per cent of net assets up to £1.2bn, 0.5 per cent of net assets between £1.2bn and £1.4bn, and 0.425 per cent of net assets above £1.4bn. Since 1 January 2019 it pays 0.5 per cent of net assets up to £1.2bn and 0.425 per cent of net assets above £1.2bn.