Three Objections Have Been Leveled at Equity-Income Investing:
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That better returns can be harnessed elsewhere in markets -
That an income-focused approach entails missing out on growth opportunities -
That share buybacks provide a viable alternative to dividend payments by companies
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- Given our contention that all three objections can be overcome, we are delighted to have supported new research from the University of North Carolina, which looks at the efficacy of equity-income investing. Specifically, it addressed the three objections above by asking:
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- Do dividends drive returns?
- Does pursuing an income-focused approach necessitate a sacrificing of growth?
- Are dividends and buybacks equally suitable ways to return income to investors?
Our Process
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- Our Global Equity Income strategy has used the same consistent and disciplined approach since inception in 2006.
- The team takes advantage of a strict buy and sell yield discipline.
- This enduring process prevents managers from ‘falling in love’ with stocks.
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- The team benefits from the expertise of our industry, theme, ESG, quant and macro research analysts.
- This ‘engine room’ of idea generation brings suitable stocks to the portfolio managers, who use their expertise in equity-income investing to debate and select those they deem to have the most attractive attributes.
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- The process is tried and tested, which is why we are sticking with our time-honored approach: a strict, disciplined process, backed by a strong team of analysts. The four portfolio managers complement the approach with deep equity-income experience and expertise.
Meet the Global Equity Income Team
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Jon Bell
Portfolio manager, global equity income
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Robert Hay
Portfolio manager, global equity income
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Paul Flood
Head of mixed assets investment
Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.
Newton Global Equity Income strategy – key investment risks
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- Objective/Performance Risk: There is no guarantee that the strategy will achieve its objectives.
- Currency Risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
- Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
- Emerging Markets Risk: Emerging markets have additional risks due to less-developed market practices.
- Concentration Risk: A fall in the value of a single investment may have a significant impact on the value of the strategy because it typically invests in a limited number of investments.
- Liquidity Risk: The strategy may not always find another party willing to purchase an asset that the strategy wants to sell which could impact the strategy’s ability to sell the asset or to sell the asset at its current value.
- High Yield Companies Risk: Companies with high-dividend rates are at a greater risk of being able to meet these payments and are more sensitive to interest rate risk.
- Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.