More than half of the top-10 best selling funds in September have either a fixed interest or equity income focus. Andy Parsons (pictured), head of research at the firm, says the search for yield remains one of the biggest themes in investment at the moment.
“Investor appetite for income is in no way diminishing, with six of the top ten funds having an investment income mandate,” he said.
This is in spite of warnings from numerous industry experts that there is diminishing value in dividend paying stocks, and investment grade debt. Co-head of multi-manager at Cazenove Robin McDonald says he is ditching defensive portfolios like Invesco Perpetual Higher Income in favour of more growth-focused options, like Fidelity Special Situations.
Parsons thinks it is unsurprising that investors are looking from the UK, and selecting overseas funds to diversify their level income stream.
“Despite continuing global uncertainty around the European crisis, a potential slowdown of the Chinese economy and the rapidly approaching US fiscal cliff, investors are looking all around the world for their growth and income.”
Top-10 best selling funds in September 2012
| Fund | IMA sector |
| L&G General UK Index | UK All Companies |
| Jupiter Global Managed | Global |
| Newton Global Higher Income | Global Equity Income |
| Invesco Perpetual Monthly Income Plus | Strategic Bond |
| First State Asia Pacific Leaders | Asia Pacific ex Japan |
| First State Global Emerging Market Leaders | Global Emerging Markets |
| Newton Asian Income | Asia Pacific ex Japan |
| Invesco Perpetual Corporate Bond | Corporate Bond |
| Schroder Asian Income Maximiser | Asia Pacific ex Japan |
| M&G Global Dividend | Global |
Source: The Share Centre
It should be noted that the L&G General UK Index portfolio is The Share Centre's default fund.
Parsons says that Newton Global Higher Income is a good choice for investors who are looking for a broader approach to seeking income. He says the asset manager’s collective style is particularly strong.
“Third place on the list was taken by the Newton Global Higher Income fund. Managed by the highly respected James Harries, the fund seeks to identify companies globally that can achieve a rising annual income distribution along with capital growth,” he said.
He added: “Emphasis is very much on a team approach with the portfolio constructed around the Newton thematic approach to investing. The fund has an historic income yield of 4.3 per cent.”
According to FE Analytics, the £3bn Newton Global Higher Income has outperformed its IMA Global Equity Income sector and the FTSE World Index over one, three and five years.
Performance of fund versus sector and benchmark over 5yrs
Source: FE Analytics
Over a five year period, the fund has returned 30.23 per cent while its benchmark and the sector have returned 18.16 per cent and 16.23 per cent, respectively.
Newton Global Higher Income has a total expense ratio (TER) of 1.62 per cent and has a minimum investment of £1,000.
The highest ranked fixed income fund is the £3.4bn Invesco Perpetual Monthly Income Plus portfolio, which came fourth in the overall list.
Co-managed by Paul Read and FE Alpha Managers Paul Causer and Neil Woodford, the fund has 17.88 per cent of its total assets in UK equities.
Since the Invesco Perpetual fund was launched in 1999 it has consistently beaten its IMA Sterling Strategic Bond sector and benchmark.
According to FE Analytics, the fund is a top quartile performer over a one, three, five and 10 year periods.
Performance of fund versus sector over 10yrs
Source: FE Analytics
Over 10 years, Invesco Perpetual Monthly Income Plus has doubled the returns of the IMA Sterling Strategic Bond average. The fund has returned 174.73 per cent and the sector has returned 72.34 per cent.
The fund is yielding at 6.42 per cent and has a TER of 1.44 per cent.