Yield squeeze forces UK income fund managers to look overseas

UK equity income managers have been utilising more of their overseas investment budgets as they struggle to find suitable opportunities in the UK.

Morningstar data shows the average UK equity income manager now holds over 10% of their fund in overseas stocks, following a steady downwards trend for UK-listed exposure in recent months. The typical fund in the sector now has 13% overseas, according to the data provider, up from 10% as of the end of 2013, and some of the largest funds are nearing their 20% limit. The £6.2bn Woodford Equity Income fund currently has just under 15% in overseas assets, Chris Reid’s £892m Majedie UK Income fund has nearly 18% invested overseas, while Chris Metcalfe’s £1.9bn Newton UK Income fund has ove...