The fund, managed by Heslop alongside Amadeo Alentorn and Mike Servent, is a sub-fund of the Dublin-domiciled Old Mutual Global Investors Series umbrella fund and has a monthly income targeted at 30% above the MSCI All Countries World Index.
Heslop said the fund’s launch was driven by investor demand and allows access to a larger proportion of the company’s global client base.
“We have quite an extensive client base and one of the things they have been talking to us about is income,” he said. “With the fund we have been able to use the same stock selection process as some of our other products but have tilted the portfolio towards yield. As a result, it looks very different to some other similar portfolios.”
The fund is designed to achieve a total return through a combination of income and capital growth by targeting dividend yield and capital growth through a diversified equity portfolio.
The investment team focuses on stock selection through the analysis of fundamental company data with consideration to the macro environment and investor sentiment which it believes will provide “significant diversification” from concentrated style-based global equity income funds.
Blended styles
Rather than building a balance book entirely through stock selection, Heslop said the fund’s management team analyses how markets work, then where mispricing occurs and how it can be taken advantage of.
“Unlike other funds, we don’t completely remove stocks that do not pay dividends,” he said. “What we say is that stocks can be in the portfolio for a number reasons, so we will target a 130% portfolio yield against index without requiring massive dividend payers.
“Our top 10 holdings will be very different from the normal suspects.”
Part of the team’s process involves focusing on what Heslop describes as “style-based” stock picking which uses market analysis to invest in a thematic blend of stocks, eradicating the normal downside risk accumulated by more concentrated portfolios.
“Asset managers tend to be concentrated on certain styles but we have found success in blending different styles together to tilt the portfolio away from the stock which could underperform, given the type of market being invested in,” he said.
