The Elite Bloxham Global Equity Income Fund has outperformed the Invesco Perpetual High Income Fund by over five per cent since its launch back in April 2008.
The fund has also outperformed Oliver Russ’s Ignis Argonaut European Income Fund by over 12 per cent and the IMA UK Equity Income Sector Average by over ten per cent since launch.
It has grown its dividend stream by over five per cent per annum on average since launch.
The historic gross yield for the fund today is 4.8 per cent, but fund manager Pramit Ghose has a target of growing the fund’s dividend stream by six per cent to eight per cent in 2010. If achieved, this will be the eighth year in a row that Ghose has managed to achieve positive dividend growth for his global equity income portfolios since joining Bloxham in 2002.
Dividend growth in 2009 was six per cent despite a 20 per cent or more fall in dividends globally.
“Despite recent weakness, we remain constructive on the outlook for global equity markets in 2010, expecting returns for the year in the eight to ten per cent range,” says Ghose. “We are encouraged that economic and corporate data continues to improve and the broad trend towards an unfolding recovery seems clear.”
That said, Ghose says he expects to see a divergence in global growth in the coming years, especially between the emerging market economies and Europe.
“In our view valuations do discount an element of recovery and we expect earnings growth to take over as the key driver of returns in 2010 and into 2011,” he says. “Volatility will remain a market key theme, while risks include sovereign credit and the timing of policy re-entry globally.”
The fund retains a majority core holding in mega and large cap, stable growth, quality dividend paying stocks such as Nestle, Diageo and Merck. These core holdings are supplemented by holdings in high quality cyclical companies which provide exposure to improving economic developments, such as BHP Billiton and Home Depot.
The fund is currently underweight in telecoms, utilities, financials, equal weight energy and overweight in defensive sectors such as pharma, food, beverage and tobacco.
Ghose has increased his US exposure to 35 per cent, up from 22 per cent in September 2009. He is also looking at adding more exposure to global emerging markets on recent weakness and has been buying large cap European stocks with large non-euro revenue exposures which have fallen heavily over the past few weeks.
Cash weighting is currently around five per cent.