Funds Centre

Allianz RCM European Equity Income - new launch

History has shown that dividends, and more importantly the growth in dividends can form a large part of long term returns. With this in mind Allianz is launching the European Equity Income Fund in order to capture the high yielding opportunities within

the European stock market. They believe that many shares in this market have the potential to yield better returns than cash and government bonds over the longer term, albeit with higher risk.The fund will be managed by Neil Dwane and Jorg de Vries-Hippen who invest on the principle that dividend paying companies tend to be mature, well established companies and that dividend growth has historically been less volatile than earnings growth in companies. Dividends can therefore be a better indicator of a company’s prospects.At launch, the estimated yield will be in the region of 6% (variable and not guaranteed) and will be paid quarterly. The managers will focus on delivering a growing income as well as capital growth over the longer term.The core of the fund’s strategy is to focus on a company’s dividend history and their dividend payout policy which can signal the strength and stability of the business. Careful attention is paid to balance sheet strength and the ability of the company to generate cash. In an environment where dividends are being cut, cash flow has become a very important factor.According to the managers, many of the larger European companies are offering extremely attractive dividends which are well covered by existing cash. Europe also offers three times as many high yielding shares as the UK so there are should be plenty of opportunities. Investors should note that by investing in an overseas fund, returns will also be subject to the movements in currency and this will be an additional risk that needs to be taken into account.Please note that the Allianz RCM European Equity Income Fund is not on the Wealth 150 list of our favourite funds in each sector at this time.Meera Patel, Senior Analyst> Key Features of the Allianz RCM European Equity Income Fund