Subscribers iconSite access
Newsletter signup



home subscribe

Print
Email
Text size
Comment

Newton warns on Higher Income yield

5 February 2010

Newton has warned investors not to be misled by the current yield figure for its Higher Income fund being advertised by some ratings agencies.

Tineke Frikkee, investment manager for the equity Income fund said the yield figure issued by fund ratings agencies would need to be adjusted due to the fund changing the frequency of its income payments from half-yearly to quarterly at the end of last year.

As a result, statistics from Financial Express show that the full year yield has been 8.5 per cent, which would make the fund a stand out performer in the IMA’s UK Equity Income sector.

However, the additional payment, which came about because the fund moved to quarterly dividends, means that the figure should be closer to 7 per cent, which would mean the fund would be the second best performer (on dividend yield) in the sector.

In an exclusive interview with What Investment.co.uk, Frikkee said that the change will bring the fund's distribution cycle in line with the other Equity Income funds in the BNY Mellon range.  The company said that it is more in keeping with the fund's aim to provide 'regular income'.

Frikkee explained that the strategy of her fund means she is subject to a strict dividend yield objective and that has been the key to its success.

As a result, any stock that is added must have a dividend yield of 15 per cent or more above the average FTSE All Share yield.

Frikkee explains, ‘We [Newton] would sell a stock when the dividend yield drops below the market average because when we look at the yield of a stock, we look forward, especially during the period of dividend cuts.

‘We aim to grow our income every year, so, at this stage, we would look at the dividends between now and February 2011.

It is a very short time frame, but that is how we work.’ The news comes just one week after Schroders announced that it expected the dividend on its income fund to reduce by around 30 per cent (read here).

User comments

There are currently no comments on this post.

 

Advertisement

Related Content

Interesting links
 

Latest news

picture

F&C multi-manager duo to depart following Thames River deal  2 September 2010

F&C Asset Management has revealed that head of UK retail multi-manager Dean Cheeseman and fund manager Oliver Sonnbichler will leave the firm, following the completed acquisition of Thames River Capital. more

Recommendations Recommendations

 

Top ten  Top Ten Life Funds

Fund Offer 1y 3y 5y
UBS Life Structured Credit A 94.15 174.5 n/a n/a
Skandia Finland FIM Russia 11.29 60.6 -2.7 48.5
Skandia Finland Alfred Berg Ryssland 0.86 49.5 -18.0 n/a
Skandia Finland BlackRock Gold & General 2.57 45.6 41.3 150.3
Zurich American Property AL G4 43.30 44.7 20.9 39.3
Skandia Norway Alfred Berg Ryssland 0.87 41.2 -16.8 n/a
Aviva Investec Global Gold S4 0.00 41.0 n/a n/a
Skandia Finland JPM New European 2.07 40.7 -13.2 44.6
Skandia Finland First State Greater China Growth 1.35 40.0 n/a n/a
Skandia Finland Neptune Russia & Greater Russia 1.49 39.8 n/a n/a
 

Investment funds in depth

picture

Structured range in development at Barclays 2 September 2010

Barclays Wealth is planning to launch a new range of structured products in the coming weeks, What Investment has learnt. more

 

Guides

picture

Asset monitor: UK equities 29 June 2010

With investors reassessing their portfolios in light of fluctuating economic conditions, Joe McGrath asks the experts how they are riding the choppy markets. [Premium content] more

 

Special Offers