Investment approaches
global equity income
A global strategy with a proven track record, aiming to generate sustainable returns by harnessing equity income through a disciplined, repeatable process
-
Investing in cash-generative companies, with a valuation screen to help achieve a dividend yield above that of the comparative index
-
A global investment universe offers investors an opportunity to diversify their equity-income investments. Active stock selection is guided by our investment themes, fundamentals and valuation
-
A focus on sustainable dividends has given the strategy notable resilience in difficult market conditions
Our philosophy and process
- The strategy is conviction-based, with no regional or sector constraints. Portfolios tend to hold stocks of cash-generative companies with highly attractive dividend yields. The strategy employs a valuation screen to help portfolios in their aim to achieve a dividend yield above that of the index.
- A constantly evolving and forward-looking approach seeks to anticipate change, manage risk, and identify opportunities.
- ESG considerations are integrated throughout the research process and via proprietary quality reviews, to ensure that any material issues are captured.
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.
Financialization
Cheap money has caused rapid growth in a sector already supported by deregulation. ‘Financialization’ investigates the implications of finance dominating economic activity, instead of serving it.
Transcript
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 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 sustainable 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
-
Nick Clay
Portfolio manager, global equity team
-
Robert Canepa-Anson
Global analyst, cyclicals
-
Andrew MacKirdy
Portfolio manager, global equity team
-
Raj Shant
Portfolio manager, global equity team
-
Colin Rutter
Global research analyst
Strategy profile
-
Objective
- To generate distributions over an annual period together with long-term capital growth from investing predominantly in global securities
-
Comparative index
- MSCI World Index (NDR)
-
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
- $11.1bn (as at September 30, 2018)
-
Strategy inception
- January 1, 2006
Performance factsheet
Facts and commentary for the past quarter's fund and market performance.
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.