Online specialist highlights ‘fantastic global potential’
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More on Asia Pacific
Research by the online investment specialist suggests that Asian companies were much better placed to boost dividends for British pensioners than their UK counterparts.
Brian Dennehy, managing director of FundExpert and London-based IFA firm Dennehy Weller & Co, said Asian companies were accumulating cash quicker than they are paying out dividends and have less debt than UK companies. The firms enjoy greater profit growth, and regulatory changes will encourage higher dividend pay-outs.
However Mr Dennehy said there was little demand for Asian income funds among UK retail investors, who remain committed to their long-standing bias towards domestically-focused funds.
He said: “There are some outstanding UK equity income funds but to invest solely in the UK is to miss out on some fantastic potential globally.”
Mr Dennehy said investors seem to be shunning Asia because of perceived risk, but he warned that ignoring Asia could have a huge effect on a UK investor’s prospective income.
He added: “If you assume a UK equity income fund will increase pay-outs by 5 per cent a year, and an Asian fund by 10 per cent, the yield on both would be 5 per cent.
“If a 60 year old had a £1000 pay-out which grew at 5 per cent a year, it would grow to almost £2080 by age 75. However had the pay-out grown at 10 per cent, by age 75 they would have £4180.
“Pensioners will find themselves increasingly reliant on income generated in Asia. Therefore this differential in pay-outs needs to be grasped by UK investors and their advisers as soon as possible.”