Cazenove Capital has announced that it intends to launch a new European fund for head of pan-European equities Chris Rice.
The Cazenove European Income fund will seek a combination of high income with some long-term capital growth and will aim to outperform the FTSE World Europe Index when it is launched in May this year.
The investment firm claimed that the new fund was in response to client demand for an income-focused product with exposure to European equity markets.
Cazenove believes that the yield on European equities is currently ‘very attractive’.
‘Against a backdrop of suppressed valuations and low growth expectations, the FTSEurofirst 300 is yielding 4 per cent – twice that of German bunds and there are over 100 stocks with yields in excess of their price per earnings ratios,’ the investment manager said in a statement.
Rice added, ‘Europe is a dynamic market and we will adopt a business cycle approach to managing the fund.
‘In recovery phases of the market, this will see us favouring cyclicals with the potential for dividend recovery, while in an economic slowdown we will be biased towards companies offering potential for dividend growth.’
He continued, ‘This approach should enable us to provide consistent and increasing levels of income for our investors with some capital growth in a range of market conditions.’
The fund will invest in a concentrated portfolio of 30 to 50 stocks and will pay income quarterly.
Cazenove also announced that James Sym has joined the European equities team, having worked in the UK equities team at the firm since 2007, and that he will work with Rice in managing the new fund.
Said Robin Minter-Kemp, head of investment funds at Cazenove, ‘There are few European income funds and the combination of Chris Rice’s experience plus the income opportunity is an attractive offering for investors.’
Minimum investment in the fund is £1,000 and the annual management fee is 1.5 per cent.