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Sarasin & Partners has launched hedged sterling versions of its International Equity Income and EquiSar Global Thematic Equity funds as investors "tear up asset allocations" in favour of global remits.

Guy Monson, managing partner at the UK-based investment arm of Bank Sarasin, said the investment house recommended looking for investment themes and dividend income on a global basis as dividend cuts and financial issues weighed on the UK.

"If you want to invest in the broad themes that should transform the global economy, you have to invest globally," he said.

"Endowment funds have seen decimation of their income because of bank dividend cuts. We are seeing them tear up asset allocations that have sustained them for 20 years, replacing predominantly UK equity exposure with global and global hedged."

Launched on the day Standard & Poor's cut its credit outlook on the UK to "negative", Mr Monson said the sterling hedged versions would reduce exchange-rate uncertainties when investors converted their gains from one currency into another.

"It's completing a picture from a global house that says, 'Wake up!'" he said.

The Sarasin funds' move towards hedged share classes followed sterling's dramatic drop last year, when the pound shed more than a quarter of its value against the dollar.

As much as 95 per cent of the portfolios' underlying investments will be hedged by automatic currency forwards, which Sarasin described as low cost. The vehicles will undertake no tactical currency transactions as part of the move.

Although returns from global equities typically wiped out currency moves over 18-36 months, Mr Monson said "sharp UK-specific events" tended to deflate the pound and cause it to rally again over time.

"It is this we are hedging against," he said.

On the income side, the managing partner indicated the free cash-flow yield on the International Equity Income fund was now just 85 basis points lower than on MSCI UK stocks with a dividend yield of 3 per cent or more.

The free cash-flow yield of a stock is a common measure of how much cash the company has available per share to pay out as dividends, invest in its business or store in reserves.

Fund facts:

Sarasin EquiSar Global Thematic and Global Equity Income funds (sterling hedged)

Benchmark: MSCI World

IMA sector (expected): Global Growth

Initial charge: Up to 5 per cent

AMC: 1.5 per cent (A shares), 0.85 per cent (B shares)

Minimum investment: £1,000