We have long highlighted that the JPM US Equity Income fund is the most owned product among the mandates we cover, appearing in 13 of the portfolios we cover, which is not far short of one third of the total.
Those allocators may be pondering their actions this week as it has been announced that Clare Hart, who has led the fund since 2008, is to retire.
The fund’s stout underweight to technology, while logical in an income product, helped performance in 2022, as it was top quartile, and the allocators followed the numbers, with a net of three new buyers during that year, and one since the start of 2023.
Performance in 2023 has been a little tougher, the fund is bottom quartile this year as tech rebounded.
Indeed on a five year view it is only third quartile, something which again is likely to be a function of the tech rally during that period.
The extent to which this fund dominates the US equity income space can be seen in the fact that only Schroders US Equity Income Maximiser and Aviva Investors US Equity Income fund are owned by more than one of the allocators we cover, in terms of US equity income funds.
The JPMorgan fund yields 2.7 per cent, while the Schroder US Income Maximiser fund has a yield north of 4 per cent, and the Aviva Investors fund has a yield of just less than 3 per cent.
The Schroders fund has had no new buyers or sellers among the DFMs we cover, since the start of 2022, while the Aviva Investors fund has picked up one new DFM buyer since the start of 2023.
The three funds have sharply underperformed the US index, though given the technology rally of the past five years, that’s probably not a surprise.
One allocator who won’t be buying US equity income products is Darius McDermott, investment adviser to the Chelsea multi-manager fund range, who says the yield on the market is simply too low to justify inclusion in the income fund he runs.
Among the income portfolios we monitor, the average allocation to US equity funds is 10 per cent, a figure that has been steady over the past year, and represents but a modest increase on the 9 per cent figure it was when we began collating that data.
The house with the largest exposure to the US in its income portfolio is Evelyn Active, at 19 per cent, while the folks at Brewin Dolphin have 18 per cent, and Liontrust have 17 per cent.
What makes that Brewin Dolphin number stand out is that they have a sharp underweight to equities generally in their Income portfolio, their 38 per cent allocation being a full 10 per cent below the peer group average.
At the other end of the distribution, Hawksmoor and You Asset Management have zero allocated to US funds within their income portfolios, while Iboss have four per cent.
