This week I chaired this month's Best Advice: The Closed-end Fund Forum discussion on global income. As with all events in this webinar series, it was a lively and engaging discussion, thanks to my panellists and their willingness to share their opinions.
I kicked off the discussion by asking the panel if, as an industry, we're becoming too fixated with the word 'income'? Surely we should be talking about total return in any event, given the low interest rates/low economic growth we're witnessing at the moment? Peter Hewitt from F&C and manager of their funds of investment trusts shared this view and indeed takes such a view in his funds.
Nonetheless, as James de Sausmarez of Henderson was quick to point out, the investment trust structure is one that lends itself so well to income flow, that it makes sense to draw attention to this in a fund's name. He was surprised to learn that, of the 103 share classes in the IMA Global Equity Income sector, 41 were launched since the start of 2010.
The general consensus among the panel, though, was that global equity income isn't just a passing fad. Indeed, Bruce Stout of Murray International has witnessed first-hand how the source of equity income has changed geographically over time and he shared his experience of this shifting trend with us.
It's an oft-used phrase right now that the UK is more global in nature than it is exposed to the domestic economy, and John Baker from JPMorgan reminded us that we shouldn't dismiss the UK in its entirety simply to avoid single-country risk. Indeed, some of the names that feature in his portfolios derive very little earnings from the UK and much more so from emerging economies.
Listen to our discussion and draw your own conclusions. One thing's for sure, though: investment trusts have a definite structural bias when it comes to maintaining a regular flow of income and the importance of the revenue reserves can’t be underestimated.
