Legg Mason has merged its UK Income fund into a global income product owing to concerns about the FTSE’s ability to deliver income for investors.
The £7.6m Legg Mason UK Income fund, which was being run by quantitative unit Batterymarch, has been merged into the £7.2m Legg Mason Global Equity Income fund run by qualitative subsidiary Global Currents.
The group says the number of equities in Britain that deliver attractive levels of yield have dwindled. UK yield has suffered from setbacks including the crisis in the banking sector, which has seen all British banks halt dividend payments, and the oil spill that forced BP to cut its payments.
Andrew Burchill, the head of investment communications at Legg Mason Europe, says research has shown that just seven of the top 100 stocks for income in the MSCI world index now reside in Britain. (article continues below)
He says: “We believe global companies are paying higher dividends and they are also offering higher growth and capital appreciation.”
Ben Seager-Scott, a senior analyst at Whitechurch Securities, says the move might also be for corporate reasons.
He says: “The UK equity income space is very competitive and although I think of Legg Mason as being a leader in some asset classes, UK equity income is not one of them.”