BOSTON Fidelity Investments has tapped one of its up-and-coming portfolio managers to run two new mutual funds geared toward finding companies around the world that have stable cash flow and a willingness to pay dividends.
Boston-based Fidelity, which manages $1.6 trillion in assets, said on Thursday that Ramona Persaud would run two global equity income funds.
It's the first time Fidelity has offered an equity income fund with a global reach. It now offers 10 equity income-oriented funds with more than $32 billion in assets under management.
With near-zero interest rates in the United States and financial turmoil in Europe, Fidelity is betting that investors nearing retirement or already in retirement will embrace the two funds that seek income-producing stocks around the globe.
Global stocks excluding the United States have delivered a dividend yield between 2 percent and 3.5 percent over the past decade, compared with a dividend yield of 1 percent to 2 percent for U.S. stocks, according to Fidelity.
"The gap is even higher when a global equity income subset of global equities is compared with global and U.S. equities," a research report from the money manager said.
And, against a backdrop of uncertainty, U.S.-based companies are stockpiling cash on their balance sheets because they are unsure of how to allocate their capital, Persaud told Reuters in a telephone interview.
She will run the Fidelity Global Equity Income Fund - available directly to investors - and the Fidelity Advisor Global Equity Income Fund, which will be sold through financial advisers.
"Global uncertainty is positive for this mandate," Persaud said.
Not only are some companies interested in returning more capital to shareholders in the form of dividends, their publicly traded shares are getting beat up amid tepid economic growth.
Persaud said she plans to uncover the value that this fear and uncertainty creates. She said she expects her funds to be selective, owning 80 to 120 stocks.
She describes herself as a citizen of the world. She has an ethnic Asian heritage, but was born in Latin America and was educated in the United States.
Persaud joined Fidelity about nine years ago as a research analyst. She then managed portfolios that focused on U.S. sectors that included construction, housing and banking. From 2008 to 2011, she was based in London as an assistant portfolio manager on the Fidelity Diversified International Fund.
Now based in Boston, Persaud plans to marry what she learned during the first half of her career - picking U.S. stocks - with the second half of her career - picking global stocks.
"I have a belief that dividend-paying companies have more strict criteria in how they pay out capital," she said. "They make better decisions because they have less to work with because some of that capital is going to shareholders."
(Editing by Muralikumar Anantharaman)