Our philosophy and process

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use a range of global investment themes to capture these.

State intervention

Authorities have engaged in ever-greater policy intervention and regulation to shore up economic growth. We believe ‘state intervention’ has increased misallocation of capital, caused volatility in markets and inflated asset prices – and we think that calls for a stock-specific approach.

Smart revolution

Machines and networks are becoming more intelligent. This is disrupting the labour market, as machines increasingly replace humans in the workplace. ‘Smart revolution’ considers the implications commercially, socially and politically.

Net effects

The world has made the transition from connecting places to connecting people to connecting devices. The rapid rise in the ‘internet of things’ is transforming lifestyles and business. This creates winners and losers – our ‘net effects’ theme seeks to identify them.

Financialisation

Cheap money has caused rapid growth in a sector already supported by deregulation. ‘Financialisation’ investigates the implications of finance dominating economic activity, instead of serving it.

Transcript

Volatile equity markets, loose monetary policy, and persistently low bond yields have all made income harder to come by.
 
This could tempt investors out of their comfort zone towards riskier, alternative asset classes.
 
But we think there are other ways to meet your income targets AND grow your capital – and one particular solution could be our Global Equity Income strategy.
We believe the role of compounding income in creating wealth is often underestimated. Reinvesting dividends over time can turn equity income into an effective growth strategy over the
long-term.
 
But investors may feel compelled to seek the next ‘growth’ company – fearful of missing out on the next big thing.
 
However, the ability to pick one particular fish out of the sea is difficult. We believe it’s not about what you pick out – it’s what you take away that matters.
 
That’s what the discipline of income investing is about – it seeks to narrow the universe by removing the statistically unattractive stocks, leaving the attractive ones.
 
Our Global Equity Income strategy is guided by these key disciplines:

1. Our investment themes, which help us identify long-term structural changes in a market that can be too focused on the short
2. Buy and sell discipline – all new holdings must have a prospective yield 25% greater than
the yield on the FTSE World Index, and we will sell any holding whose prospective yield falls below that of the index.
3. Each stock must pay a dividend we regard as sustainab Therefore, we focus on strong
fundamentals such as solid cash flows and a robust return on capital invested.
4. And we wait for our preferred fish to swim to the top and reach an attractive valuation, to try to buy a stock at the best entry price we can.
 
Our Global Equity Income strategy seeks out both income and growth in order to try to help our clients meet their long-term goals.

Investment team

Our Global Equity Income strategy is managed by an experienced team. Our global sector analysts and investment managers are located on a single floor in London, which helps to ensure that the investment process is flexible and opportunistic. Guided by our global investment themes, the team works together to identify opportunities and risks through research and debate.

22
years' average investment experience
15
years' average time at Newton

Strategy profile

Objective

To generate distributions over an annual period together with long-term capital growth from investing predominantly in global securities.

Comparative index

FTSE World Index

Typical number of equity holdings

40 to 70

Yield discipline

Every new holding in a global equity income portfolio typically has a prospective yield 25% greater than the index at the point of purchase. Any holding whose prospective yield falls below the comparative index yield will trigger our sale discipline process.

Strategy size

£8.5bn (as at 30 September 2018)

Strategy inception

1 January 2006
UK Inst Global income pooled fund factsheet

Factsheet

Facts and commentary for the past quarter's fund and market performance.


Global Equity Income brochure

Brochure

More detail on the strategy's investment approach.


Key Investor Information Document

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Key investment risks

 

  • There is no guarantee that the strategy will achieve its objective.
  • This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • The strategy may use derivatives to reduce costs and/or overall risk and/or to generate additional capital or income of the strategy, i.e. Efficient Portfolio Management (EPM). EPM may become ineffective in adverse situations and the strategy may suffer a significant loss as a result.
  • The strategy invests in emerging markets. These markets have additional risks due to less developed market practices.
  • A fall in the value of a single investment may have a significant impact on the value of the strategy because it typically invests in a limited number of investments.
  • The strategy may invest in small companies which may be riskier and less liquid (i.e. harder to sell) than large companies. This means that their share prices may have greater fluctuations.