Premier Optimum Income switches to ex UK remit

The Premier Optimum Income fund is to move to a Europe ex UK remit after Premier said it would rename it to European Optimum Income.

Chris Wright, the manager of the fund, says the fund will shift away from its pan-European focus and sell the third of its holdings that are currently invested in Britain.

Wright says regulators are now keeping electricity prices so low that power companies cannot invest in their businesses

Wright observes the dividend yield on the European large-cap DJ EuroStoxx 50 index is currently higher than that on the FTSE 100, while the average price/earnings ratio is lower.

He is currently investing the fund more heavily in the southern European power sector, taking a 3% position in Energias de Portugal and a 2% position in Enel.

Southern European equities have been hit by sovereign debt worries, while price/earnings ratios in the European power sector are now lower than in the bleak second half of 2008 after the rally in more aggressive stocks. (article continues below)

But Wright says regulators are now keeping electricity prices so low that power companies cannot invest in their businesses, leading to probable power shortages.

Power companies will be able to charge higher prices, he says, boosting revenues.

Dividend yields are also higher than in the second half of 2008, he adds, with payouts predicted to grow in absolute terms.