Standard Life Investments has added to its US strategy with the launch of a new equity income fund to UK-based retail investors.
The American Equity income Oeic, will comprise of around 60 dividend generating stocks across various industries with the aim of generating greater returns than the S&P500 index.
It will have exposure to a diversity of stocks, both defensive and cyclical and target a balance of high dividend, dividend growth and opportunity stocks.
The investment product will be managed by Scott Eun, who has run a similar strategy for the last four years. He will be supported by Warren Gibbon and the broader US equity team of 10.
Mr Gibbon also manages the US Equity portfolio of two Pooled Pension Multi-Asset Funds in addition to analyst responsibilities for autos, metals and mining, and oil services.
According to FE Analytics data, the Standard Life North American Equity Pension Fund which is run by Jeff Morris, head of US equities and Mr Eun, delivered just over 98 per cent over five years to 17 June.
In addition, SL’s American Equity Unconstrained Fund, which is also managed by Mr Morris, returned almost 98 per cent over five year from 17 June.
Provider view
Mr Morris, said: “This is an exciting offering for investors looking for exposure to the US equity market. The vehicle’s income mandate helps reduce some of the volatility and potential downside inherent in the market while its total return approach offers the ability to perform in positive markets. Scott is an experienced manager with a solid track record behind him and the fact that we can now offer an income solution alongside the existing American Equity Unconstrained Fund is an exciting development for our team.
“Although the US is not always synonymous with income investing, there are a number of companies that have delivered stable income streams and are growing dividends. There’s also a broad spread of sectors in the US that offer income-yielding opportunities, with over 80 per cent of companies in the S&P500 currently paying a dividend.”
Adviser view
Andrew Whiteley, a financial adviser with Hertfordshire-based Provisio Wealth Management, said: “The US stock market is not something that we have a lot of exposure to. We generally get our exposure to the US market through passive funds.
“I think UK investors are looking abroad for investment opportunities because the UK stock market has not performed as well as many would have hoped. The US market has performed well so I suppose it makes sense that many investment companies are looking to take advantage of this.”
Charges
The minimum investment is £500 with an ongoing charges figure (OCF) of 0.94 per cent.
Verdict
The proliferation of funds investing in US stocks comes as no surprise. Amid a time of heightened volatility which has wreaked havoc on stock markets globally, the S&P500 has recorded a steady growth. Here, it would appear that the stellar past performance achieved by the top firms across the pond has been priced into SLI’s latest proposition. An OCF of 0.94 per cent is not cheap but the potential for S&P500 beating returns may prove too tempting to ignore for many investors. Having a fund manager who has a background in delivering good performance by adopting a similar strategy is another sweetener.
