Global funds that pay strong dividends
The new, actively managed Henderson Global Equity Income Fund invests in 50 to 80 global companies that pay strong dividends.
While global yields are typically lower than those paid by Australian companies - because other markets don't have franking credits or the same tradition of paying out dividends - they are valuable form of income at a time of record low rates.
The fund seeks companies with a long track record of solid and growing dividends. It typically does not invest in Australian companies, so will give investors diversification across regions and sectors.
As well as holding banking, insurance, property, technology and telecom companies, around 15% of the fund is in pharmaceuticals, a sector that stands to benefit from medical advances such as cancer treatments and genome sequencing, says Alex Crooke, head of Henderson's global equity income team.
Companies are chosen for their dividend growth potential and are typically held for four years.
The fund has lowered its exposure to the US because of high share prices and added more European stocks. Crooke says Europe has a lot of issues but there are some interesting, well-priced defensive opportunities there.
The total management fee is 1%pa of the assets. Distributions are paid quarterly. The minimum investment is $25,000 with subsequent amounts of $10,000.
It certainly makes sense to hold a global dividend fund because, as well as potential growth in share prices, investors receive valuable income.
The dividend-growth track record is a savvy criterion for assessing a company. This fund is one way to benefit from dividends; another is an indexed exchange traded fund such as SPDR S&P Global Dividend Fund, which charges a 0.5% annual fee.
Henderson's fund is actively managed by an experienced team, headed by Alex Crooke, who has spent 21 years investing in global equities.