At the most recent Bank of England meeting the Monetary Policy Committee, which sets UK interest rates, said that economic growth had “slowed materially”, and two out of nine committee members voted for a cut. Although the rate remains unchanged, at 0.75 per cent it is not a good environment for savers and investors who need income. As a result, many investors have looked to overseas equity income, which also has the benefit of sidestepping Brexit risks and tapping into faster-growing economies around the world.
So far, this has proved to be the right option as sterling has dipped: over the five years to the end of October the Association of Investment Companies (AIC) Global Equity Income investment trust sector average total return is 65 per cent, compared with the AIC UK Equity Income sector average of 28.09 per cent, according to fund information company Financial Express. And since 2010 dividends globally have grown at a pace of over 10 per cent a year according to the Henderson International Income Trust (HINT) Global Dividend Cover report. So global equity investors have won both in terms of capital returns and income.