BNY Mellon Investment Management has launched a US equity income fund for the UK market, following what it said was investor demand.
The BNY Mellon US Equity Income fund will be managed by The Boston Company Asset Management, an active equity manager majority owned by BNY Mellon.
It aims to deliver high dividend yield and will focus on stocks that offer dividend growth, solid fundamentals and attractive valuations. It will be fully invested in 30 to 60 US equities with broad sector exposure and has a yield target 50 percent greater than the yield of the S&P 500 Index.
BNY calculates that with US corporations having over $4.3trn in cash balances and cash flow from operating activities at record levels then dividends to investors should remain high.
Fergus McCarthy, head of UK and Ireland intermediary distribution at BNY Mellon Investment Management said: “We continue to see increased demand from clients for income strategies with exposure to more diverse markets than just the UK. Historically investors have not looked to the US equity market for income but given the breadth and size of the market, we are now getting more investors asking us about prospects for investment.”
Mark Dampier, head of research at Hargreaves Lansdown, who has frequently endorsed the wisdom of equity income funds, welcomed the growth of equity income funds from overseas.
However, he questioned how proven the model was overseas, as the UK had a 100 year history of investing in this way. "What you do not want is a company to pay a dividend for a couple of years and then say 'we do not want to do it anymore'."
