Analyst: Shane O’Neill, Bloxham Asset Management
Bloxham Asset Management does not boast the same household-name status as some of its peers in the Global Growth sector. With only one UK-domiciled strategy, which has spent barely a year onshore, that is hardly surprising. Yet if it can deliver the income yields it proposes, the situation is likely to change.
Financial advisers across the land are well aware that yesterday’s Mena and commercial property fund investors have morphed overnight into today’s risk-averse yield hunters, turning to equity income out of desperation at paltry cash interest rates.
In its homeland of Ireland, Bloxham is the oldest existing stockbroker. In 2002 it recruited Pramit Ghose to set up its asset management division. Having headed the asset management arm of Aviva in Ireland and won institutional clients which number Aer Lingus and Ryanair, Mr Ghose has won a MoneyMate fund manager of the year award four times in a row.
In spite of its launch at the tail end of a terrible bear market in a country where Shane O’Neill, head of UK distribution, says “if you weren’t getting a return of 20 per cent per year from property, you were in the wrong investment”, the fund house now boasts nine Irish-domiciled global equity funds. Its assets under management grew from €10m (£8.6m) in December 2002 to €1.1bn at its peak five years later.
In the seven years since launch, the Irish-domiciled Bloxham Global High-Yield fund - upon which the UK-based Elite Bloxham Global Equity Income fund is based - has produced an average dividend growth of 9 per cent. In the 12 months since its launch last April, the UK Elite fund has produced a 5.5 per cent payout and managed to avoid all of the market’s many dividend ‘passes’. By contrast, the most competitive cash Isas currently offer interest rates of around 3 per cent and lack the simultaneous opportunity for capital growth.
“It’s very important to us to offer people a conservative portfolio that has the greatest probability of growing its dividend stream,” Mr O’Neill says. “We believe global equity income is one of the few asset classes where you can achieve a 4-5 per cent yield and grow the income year-on-year, as well as growing the capital value over time.”
He describes Mr Ghose’s investment approach as “value-oriented, conservative contrarian”, which seems to fit harmoniously with investor appetite at the moment. To reflect its conservatism, 91.5 per cent of the fund invests in companies with a market cap of €7.5bn or over. The portfolio also maintains a cash allocation of 7.5 per cent.
Mr O’Neill believes this sets Bloxham’s offering apart from its IMA Global Growth income peers, which he says are more biased toward emerging markets. Operating in the Global Growth sector also has its advantages. Mr O'Neill says: "In the UK, if anything happens to BP, Glaxo and one or two more stocks, it will put a pretty serious dent in a lot of UK Equity Income funds. For us, if anything happened to BP, we have Royal Dutch Shell – we can manoeuvre away. The diversification argument is much better for global."