PRESS RELEASE

RWC Partners to launch high conviction global equity income fund for Nick Clay

16 September 2020

RWC Partners’ new global equity income team, led by income veteran Nick Clay, will launch a high conviction global equity income fund in Q4 2020.

Shaped by Clay since 2012, the team and process behind the fund will be largely the same as the one that saw Clay’s assets at Newton reach £10bn. 

Clay has been managing a disciplined dividend-focused strategy for over eight years. The RWC Global Equity Income Fund will have a similar mandate to the BNY Mellon Global Income Fund, which generated 2.4% outperformance net of fees per annum under Nick’s leadership[1], putting it in the top decile versus global income peers[2]. The team has honed a process of stock selection in a concentrated, high active share portfolio, with emphasis placed on providing a consistent income, growing dividend distributions at 5.9% per annum over the last five years[3]. The result is a strategy with strong risk adjusted returns, characterised by seeking to select quality, premium yielding companies trading at attractive valuations.

Gary Tuffield, Head of European Sales at RWC, commented: “Investors are sounding the alarm bell around the extreme valuations of tech stocks, questioning the sustainability of earnings from the so called FAANGS and whether they are in bubble territory. In many ways this environment echoes the ‘irrational exuberance’ coined by Greenspan in the late 90s, which served as a precursor for the dotcom bust.”

“In addition, with interest rates anchored at 300 year lows and credit spreads back to pre-pandemic levels[4], investors are being woefully compensated for the significant rise in defaults that we are witnessing and a genuine lack of yield from deposit accounts. With many companies currently aggressively slashing dividends to fund short-term cash flows, the need for a disciplined and proven process to identify quality companies that have the ability to not only generate, but sustain a reasonable level of dividend income, is needed now more than ever.”

“Nick, Andrew, Robert and Colin, with over 90 years of combined industry experience, are recognised as one of the most experienced portfolio management teams in the industry and we believe they, via their process, can exploit opportunities that are beginning to arise, by seeking to deliver investors a safe and consistent place to generate a differentiated return stream, with an attractive source of income from a portfolio of global equities”.

The new fund will have a strict buy and sell discipline and follow a high conviction quality income strategy, investing in c. 40-60 stocks across the global market capitalisation spectrum.

The fund will be broadly diversified across sectors but could be materially underweight or completely omit a number of sectors if they are deemed unattractive.

[1] Source: Trustnet as at 14 September 2020. BNY Mellon Global Income Fund Inst W Acc share class returned 10.14% per annum over the period of 01 July 2012 to 31 March 2020 versus the IA Global Equity Income sector which returned 7.75%. The fund was co-managed by Nick Clay and James Harries from 01 July 2012 – 31 December 2015, and led solely by Nick Clay from 31 December 2015 – 31 March 2020.

[2] Source: Morningstar, September 2020

[3] Source: Bloomberg as at 14 September 2020. BNY Mellon Global Income Fund 5 year dividend growth of 5.86% to 31 August 2020. Past performance is not indicative of future results.

[4] Source: Bloomberg, September 2020

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