Wells Fargo adds emerging markets product

Wells Fargo Asset Management has launched a sterling-denominated gross distributing institutional share class of its Worldwide Emerging Markets Equity Income Fund.

The move was in response to demand for funds with potential for greater dividend yields.

Distribution of gross income means fees and expenses are applied to capital rather than income, resulting in a higher distribution to shareholders. This approach may be attractive to investors who seek to maximise income.

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Key Features:

· The fund invests principally in dividend-paying emerging markets equity securities

· It seeks companies with a sustainable high dividend yield and good growth profile backed by strong company financials and fundamentals, including above-average sales and earnings growth, competitive advantages and capable management

· It employs both a top-down strategy, which takes account of overall economic and market trends in each country, and a bottom-up strategy in which the team uses fundamental research for security selection

Adviser View

Jason Butler, senior partner at London-based Bloomsbury Private Wealth, said: “It makes sense to have some EM exposure; how much is down to how much extra return you get. But it comes with more risk.

“If you are offering an active fund, which this is, it will cost twice as much as a passive one and if this is taking fees from the capital, and gains do not arise, it could be disastrous. What Wells Fargo is doing is providing another route to sell the fund to another market so there is nothing to get excited about.”