Axa Investment Managers is looking to broaden out its equity income fund proposition.
Head of UK wholesale distribution at Axa IM Rob Bailey says owing to bond funds – notably high yield – losing favour with investors on the expectation of a near-term interest rate rise, investors are searching for an alternative source of income.
“It has been a funny year; our net sales have been flat through the year. Clients have moved away from high yield as people expect interest rates to rise. Although it won’t happen until after the general election,” Bailey says.
The group currently has three UK equity income funds in its Axa Framlington stable; George Luckraft’s £143m Equity Income fund and Jamie Forbes-Wilson’s £84m Blue Chip Equity Income fund, as well as Luckraft’s £137m Monthly Income fund which invests in both equities and fixed income.
“Our income proposition needs to improve,” Bailey says. “We need more in the way of income funds, either in global, European or US equities. As the population ages people want more income assets and if people cannot get that from fixed income the next place to look is equity income.”
However the group has a global equity offering in its offshore range; the Axa WF Framlington Global High Income fund, a sicav run by William Howard.
“William does a good job of running the fund and it is £100m now which you need before clients will look at it,” Bailey says. “But lots of the support for income comes from fund platforms and it is not easy to get an offshore fund on there. Over half of our sales come through platforms now so it is crucial to be on platforms. And clients want the UK-domiciled funds first.”