Income-focused global equity funds are outperforming their peers year-to-date after lagging broader equity markets in 2023.
When global equities were dominated by a handful of names such as the ‘Magnificent Seven’, income-focused equity funds lagged the broader indices and actively-managed funds overweight technology stocks.
Although certain tech names continue to perform well in 2024, the rally in global equities has broadened out.
This year also saw a notable change for income and dividend focused equity investors, with many tech giants announcing dividends for the first time in their history.
Earlier in the year, Alphabet, Meta and Salesforce, along with a handful of other tech firms, announced their first-ever dividend payouts. This means income equity strategies can now access these names for their portfolios.
Below, FSA highlights five income or dividend focused strategies that are outperforming the competitive international equity sector in Singapore and Hong Kong year-to-date*.
Fidelity Global Dividend
This giant $12.7bn fund is run by Daniel Roberts. It has a concentrated investment approach with 40 positions. Its largest holdings each make up between 3% and 4% of the total portfolio.
Sector-wise, the fund is overweight financials and industrials, two industries with relatively mature companies which are typically more dividend focused.
Consumer staples is another meaningful overweight, where Unilever forms the fund’s largest position at 4.7%.
Year-to-date, the fund has delivered a top-quartile total return of 18.3%.
Allspring Worldwide Global Equity Enhanced Income
This small $44m fund is managed by Eddie Cheng, and focuses on delivering capital gains and income, enhanced by writing call options to collect the premium as income.
It has 95 holdings, with large positions in technology stocks such as Apple, Microsoft and Nvidia, which fund manager Cheng told FSA helps generate index-level returns, compared with most income funds that don’t typically have exposure to these names.
In terms of sector positioning, it has exposure similar to that of the index, except with more concentrated positions comprising just a few names for each.
Year-to-date, this fund has delivered a top-quartile return of 17.8%.
Amundi Global Equity Sustainable Income
This $2.6bn fund is run by Piergaetano Iaccarino and Peter O’Donoghue.
It has a relatively concentrated approach with 59 positions. Its largest position is in Microsoft, where it forms a notable overweight at 6% of the portfolio.
It has a slight overweight towards financials, and global financial services powerhouses JPMorgan Chase & Co and Japanese-listed Sumitomo Mitsui Financial Group are its second and third largest positions respectively.
It has delivered a 16.6% return year-to-date, beating most of its peers.
M&G Global Dividend in US
This $2.7bn fund is managed by Stuart Rhodes, alongside deputy fund managers John Weavers and Kathryn Leonard.
This is another strategy that runs a concentrated investment approach, with just 40 positions. Its largest position, Imperial Brands, makes up 8.1% of the portfolio.
The fund is also running a meaningful underweight to information technology, instead overweight energy and consumer staples, although it does have an overweight position in new dividend payer Meta Platforms.
This fund has delivered a 16.5% return year-to-date, also beating most of its peer group.
Jupiter Merian Global Equity Income
This $37m fund is managed by Jupiter’s systematic equities team headed up by Amadeo Alentorn, alongside James Murray, Matus Mrazik, Tarun Inani, Yuangao Liu and Sean Storey.
This fund is outpacing its peers year-to-date, with a 16% return so far in 2024, and is one of the few income focused funds with top ranked returns in 2023 when most other similar strategies struggled.
The strategy has the lowest concentration of all the funds above, with 253 positions. Although its largest position (Nvidia at 4.3%) still outweighs that of the benchmark (3.9%).
*The top-performing funds were measured in US dollar terms. The year-to-date performance is based on data from FE fundinfo ending 23/9/2024. The data only includes funds that fall under the Hong Kong SFC Authorised Mutual or Singapore Mutual equity international sectors in the FE analytics platform.
