For income investors, the US equity market offers an abundance of opportunities. The trick is finding the right fund and manager that can identify and take advantage of those companies offering the best yield.
Rob Morgan, investment and pension analyst at Charles Stanley Direct, picks three US equity income funds worthy of a place in any income-seeker’s portfolio.
1. Jupiter North American Income
This fund managed by Sebastian Radcliffe is less of a pure income fund and more “income and growth”. He looks to identify companies that are able to grow their dividends potentially quite quickly from a low base, combining these with more established dividend payers.
This could result in a better result for investors seeking the best total returns, though for those that are seeking to maximise short term income the yield may seem unappealing. However, it is my pick in this ‘sub-sector’ as I rate him highly as a stockpicker and he runs a high conviction portfolio in this fund.
2. JPM US Equity Income
Clare Hart and Jonathan Simon run a fairly traditional equity income strategy and use a fair bit of mid-cap exposure, which has added value since launch nearly five years ago. It is also a fairly broad-based fund with more than 100 holdings making it a decent fund to consider for wide exposure to the US market as well as for yield.
3. Neptune US Income
While short term performance has been behind the sector, this has much to do with the relative under performance of some emerging markets-facing stocks. It is possible the fund could come back strongly should these enjoy a renaissance.
The manager, Rebecca Edelman, is keen to have a balanced portfolio rather than one weighted towards traditional dividend-paying areas such as telecoms, utilities and consumer staples. Only the latter represents a significant part of the fund. Elsewhere there is significant exposure to economically sensitive areas such IT, financials, industrials and retail.
