Newton is set to remove the word ‘higher’ from its Higher Income and Global Higher Income fund, but says the payouts on the funds will not be reduced.
BNY Mellon Investment Management, the parent company of Newton, has said that from April 1 this year, both funds will be renamed, and the Higher Income fund will have its yield requirements removed.
The £1.9bn Newton Higher Income fund will be renamed the Newton UK Income fund, while the £4.5bn Newton Global Higher Income fund will be named the Newton Global Income fund from April.
The announcement comes after the Global Higher Income fund was included in Bestinvest’s latest ‘dog list’ of consistently underperforming funds.
The renamed Newton UK Income fund will also have its existing stock-specific buy and sell yield discipline removed from the same date in order to broaden the fund’s stock selection criteria, BNY Mellon said in a statement.
BNY Mellon stated that the removal of ‘higher’ from the funds’ names should not be taken as an indication of its intention to reduce income payments.
It added: “The sub-fund will continue to seek, on a sustainable basis, both increasing annual distributions and long-term capital growth, consistent with its objective.
“The name change also reduces the possibility of potential investors confusing this sub-fund with ‘booster’-style funds, which tend to target income over growth and use derivatives of some type to increase the yield. Such funds represent different propositions.”
BNY Mellon said both funds will remain in their respective IA sectors following the name changes.
According to FE Analytics, the Newton Global Higher Income fund, which is run by James Harries, returned 16.95 per cent in the year to January 28, against the sector average of 13.60 per cent placing it top quartile.
The Newton UK Income fund, as it is set to be known, has seen its performance improve in the past 12 months to return a top quartile 12.24 per cent to investors, after several years of bottom quartile returns against the UK Equity Income sector.
