German asset manager
Allianz Global Investors is planning to launch an Allianz RCM European Equity Income Fund, with versions available in both the
UK and continental
Europe. It will invest in European blue chip companies and will aim for a high but sustainable level of income.
Neil Dwane, chief investment officer
Europe at Allianz investment and research platform RCM, said: “Valuations for equities are already discounting a great deal of bad news, including dividend cuts. Given the incredibly challenging outlook for world markets, we believe that equities will yield better returns than cash or government debt as bond issuance and money are printed in huge quantities. We see many European blue chips as offering extremely attractive and well covered dividend yields. These are strong companies that we think are unlikely to suffer too much from the downturn.
“The continent is currently offering three times as many high-yielding stocks and greater dividend cover than the
UK. European companies have a higher free cashflow than the global average and the continent is also less dependent on the banking sector for dividends.”
Nick Smith, head of fund distribution, at Allianz Global Investors (UK), said: “We have been market testing a European Income product and the feedback has been very favourable. The market is asking for a product which will offer attractive returns despite the difficult environment. Many investors already have sizeable portfolios in the
UK equity income sector. This new fund is designed to diversify these portfolios, and provide investors with the opportunity to benefit from the recovery in equity markets which RCM expects to follow later this year.”
