16 December 2020 – RWC Partners have launched a high conviction global equity income fund, which will be run by veteran manager Nick Clay and his team.
TM RWC Global Equity Income fund will adopt a similar philosophy and investment process to that used very successfully by Nick and the team when they managed the BNY Mellon Global Income fund (previously the Newton Global Income fund) – growing the fund to around £10bn of assets at its peak and returning 111.5%* over their tenure compared with 77.8%* for the sector average.
The team has honed a process of stock selection in a concentrated, high active share portfolio, with emphasis placed on providing a consistent income, growing dividend distributions at 5.9% per annum over the last five years**
The new fund will have a strict buy and sell discipline and follow a high conviction quality income strategy, investing in c. 40-60 stocks across the global market capitalisation spectrum. The fund will be broadly diversified across sectors but could be materially underweight or completely omit a number of sectors if they are deemed unattractive.
Chelsea’s research team met with Colin Rutter, one of the team members in October this year. He told the team that all four managers have to agree on a new name and what position size they will take. They have three elements to the process: a strong buy/sell discipline; sustainability of business model; and good valuations. Each of these elements can be found commonly, but rarely are all three together. The sweet spot is usually found during a period of controversy. “We buy the controversy, and sell the consensus,” Colin said. Every name has to yield 125% of the index yield before they buy it, and they are obligated to sell a position if the yield falls below the index level during a rolling 30 day period.
The BNY Global Income fund was popular among Chelsea clients, but was removed from the Chelsea Selection when the managers left the company.
Those investors wishing to follow the team and invest in the new fund will be pleased to learn that they can benefit from a lower fee: the ongoing cost for Chelsea clients is 0.7% (the usual cost is 0.91%).
*Source: FE fundinfo and Investment Week
**Source: Bloomberg as at 14 September 2020. BNY Mellon Global Income fund five year dividend
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the research team and do not constitute financial advice.