Fund of the week: scouring the globe for income

"You never know what's going to add value. To limit yourself to relatively broad country or asset weightings is restrictive," Sarasin & Partners' chief investment officer Guy Monson tells Gary Shepherd of Portfolio Adviser. "I try to monitor many different indicators".

This open-minded view seems to work for the Sarasin International Equity Income Fund. Launched in May 2006, over the three years to 31 May, the £91m fund was down 1.7%, compared with an 8.8% fall in the MSCI World ex-UK index. The fund gets its dividend stream from a diverse portfolio of global equities, co-manager Mark Whitehead tells James Kenny of FTfm. As such it avoids becoming too concentrated, a trap that has ensnared many UK equity income funds.

These days, says Whitehead, many such funds are becoming too dependent on just five stocks (the oil majors Royal Dutch Shell and BP, banking giant HSBC, pharma group GlaxoSmithKline and telecoms group Vodafone). "There is also a lot of cyclical risk from investing in the oil companies." In contrast, by being benchmarked to the MSCI World ex-UK index, Whitehead has a full 1,700 companies to choose from, of which 584 were yielding more than 4% at the end of last month.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

In terms of regions, "Europe has always produced a high yield and payout ratio, and a lot of US companies are getting better at progressive dividend policy". Emerging market returns have also been "excellent". Whitehead likes two Chinese stocks just now Shanghai Industrial, a toll road operator and infrastructure giant, and hygiene product producer Hengan.

Contact: 020-7038 7000

table.ben-table table { border: 3px solid #2b1083;font: 0.928em/1.23em verdana, arial, sans-serif;}

th { background: #2b1083; padding: 10px 5px;color: white;font-weight: bold;text-align: center;border-left: 1px solid #a6a6c9;}th.first { border-left: 0; padding: 5px 2px;text-align: left;}

tr {background: #fff;}

tr.alt {background: #f6f5f9; }

td { padding: 5px 2px;text-align: center;border-left: 1px solid #a6a6c9;color: #000;vertical-align: center;}td.alt { background-color: #f6f5f9; }td.bold { font-weight: bold; }td.first { border-left: 0; text-align: left;}

Sarasin International Equity Income Fund top ten holdings