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THERE’S A WORLD OF INCOME OUT THERE! JPMORGAN ASSET MANAGEMENT URGES INCOME INVESTORS TO BROADEN THEIR HORIZONS

Oct 22, 2007

JPMorgan Asset Management (JPMAM) is urging income investors to explore investment opportunities that offer global exposure as well as those that are purely UK-focused. Whilst UK equity income funds have, in the past, seen high returns and remain as one of the most popular investment sectors with UK investors, JPMAM believes there is a world of income opportunities out there offering good value and high dividends. Indeed, of the 100 highest yielding stocks on the FTSE All-World Developed Index, only 13 are UK companies. The others are to be found in markets as varied as US, Europe and Japan.

UK Equity Income funds are a popular choice for UK investors, often making up the backbone of many portfolios. However, JPMAM believes that there is a wealth of undiscovered income opportunities that lie overseas as well.

The £47.7m JPM Global Equity Income Fund, launched in February this year and managed by Gerd Woort-Menker, has returned 6.12% over 6 months against a UK Equity Income sector average of 0.13%. Furthermore, the fund is on target to achieve its aim of a 4% gross dividend yield through its focus on stocks that not only demonstrate a strong dividend, but the ability to grow its dividend too.

The ‘go-anywhere’ JPM Global Equity Income Fund brings together the most attractive dividend-yielding companies from across the world.  By taking advantage of global opportunities and investing in companies with the potential for strong dividend growth, investors could continue to benefit from a rising income for years to come. Taking the global perspective also enables the fund to gain exposure to a much broader range of industries not normally associated with UK equity income funds, where the income opportunities are often even more compelling.

In order to take advantage of the excellent opportunities around the world, JPMAM realises it must also consider the additional risk of currency fluctuations and has therefore hedged currency exposure to sterling to minimise the foreign exchange risks to UK investors.

John Stainsby, Client Portfolio Manager of JPM Global Equity Income Fund comments on global opportunities: “Opportunities in the UK are still very much there but looking globally allows us to tap into growing sectors not represented in the UK and helps us to build a more diversified portfolio of stocks. Whilst in the past, the UK Equity Income sector has posted some of the best and most consistent returns, we are now seeing good dividend opportunities in other markets too. More and more companies worldwide are acknowledging the importance of paying strong and rising dividends. In some cases this is a cultural shift – notably in Europe – as companies respond to demands for greater ‘shareholder value’. There are companies across the world which are offering some compelling income opportunities. When we look outside the UK, we can find many attractive dividend paying companies across a broader range of sectors.”

Jason Britton, Fund Manager at T Bailey, who has recently added the JPM Global Equity Income Fund to their own equity income fund explained why: "We have been long term advocates of the case for global equity income, recognising that the UK no longer has the dominance of high yielding stocks. To exploit this you need to have a house with a global research base to leverage off.  We felt that JPM had this, and also had an experienced manager at the helm in Gerd.”