Focus on North America – Managers boost US fund ranges and teams
BlackRock Investment Management is seeking at least £100m for a North American Income fund, as other managers boost their teams focused on the world’s largest market.
The BlackRock product will be headed by the company’s US-based equity income team, which manages $37.2bn and is led by Bob Shearer and Kathleen Anderson.
They have each managed US equity funds since 1997. For their latest portfolio they will invest mainly in US large caps, and also have an options overlay strategy, primarily writing covered call options.
Their fund will target an initial annualised dividend yield of 4%, paid quarterly, and also aim to outperform the Russell 1000 Value index on a total return basis.
The company said US equities currently trade at attractive valuations and offer “long-term stable income yields”.
Jonathan Ruck Keene, chairman of BlackRock’s specialist client group, which includes closed-end funds, said: “In today’s volatile and uncertain markets, with low interest rates and confidence scarce, we believe that [the trust] presents investors with the opportunity to access the investment capabilities from talented managers who have demonstrated a strong long term performance track record in US equity income.”
The listed trust will also offer a discretionary semi-annual tender at a 2% discount to NAV, for up to 20% of the shares on issue. Gearing is expected to be 10%, but not exceed 20%, of net assets.
BlackRock is not the only manager to signal further expansion into North America.
Rival MAM Funds has appointed Nick Ford (pictured) from Scottish Widows Investment Partnership to its investment team, as the group’s fund manager for US equities.
It suggested more products as a result, saying its strategy was “to invest in new talent that will enable it to launch distinct new funds and thereby grow its assets under management”.
Ford was investment director on the US and global desk at SWIP, and has over 20 years’ experience managing equity funds. He has previously co-managed the Gartmore US Smaller Companies fund, and managed US unit trusts for Sun Alliance and Clerical Medical.
Gervais Williams, managing director at MAM Funds, said: “There are few managers within the fund management arena who have such a deep understanding of US equities and Nick’s performance track record is enviable in both the small and large cap spaces.”
US markets could be volatile for all involved in them.
BlackRock’s Bob Doll said the anticipation of more money printing both in the US – fuelled by minutes from the Federal Open Market Committee meeting last week – and in Europe have boosted US shares (S&P 500 index) more than 10% since their recent lows in June.
But he added said: “The risks are to the downside, particularly if there is a disorderly breakup of the Eurozone and/or Congress fails to reach an agreement to avoid the so-called fiscal cliff at the end of this year,” Doll added. “If either of these events were to occur, the US could be pushed back into a recession.”
This would be a fall into negative territory from the already meagre 2% US GDP growth BlackRock predicts for 2012 and 2013.
“Clearly, the US fiscal cliff remains a primary source of concern and uncertainty, with no action likely until the lame duck session,” Doll added.