Wilson’s Managed Income Fund was launched in March 2008 but he recently added a sterling share class to make it more appropriate for UK retail investors. It is run as a fettered fund of Newton investment funds and currently has a 19% allocation to James Harries’ Global Higher Income, 18.1% to Jason Pidcock’s Asian Income and 18.7% to Tineke Frikkee’s Higher Income funds.
The one in-house equity income fund missing from this list is Fred Moore’s £16.7m European Higher Income Fund which, with its exposure to pharmaceuticals, telecoms and industrials Wilson, head of global strategy, had hoped would reduce the overall risk.
However, when he ran with this assumption he found this was not the case and, given the other problems in the eurozone, he has decided to leave as is.
The balance of the fund’s current allocation is 37.7% in bonds, split evenly between Global High Yield and Global Dynamic Bond funds and 11.4% in cash. He also holds 5% in derivatives that allows him, he says, to remain fully invested when he might otherwise need to move into more defensive low-yielding gilts or index-linked gilts.
“Investors will have to take risks as they can’t stay in cash,” he commented, adding: “Income is a good long-term trend. If the market doesn’t change, income will pay more than cash or sovereign bond yields.”
Since the end of March 2008, income has made a cumulative return to his fund of 21.8% compared to a capital return of 12.3%.