The new fund will invest in a portfolio of high quality stocks in line with that of the Global Brands Fund and is targeting an annual yield of 4%.
It aims to generate returns through a combination of dividends from the shares it buys and premiums earnt from index option overwriting, which generally involves the sale of call or put options on stocks that are believed to be overpriced or underpriced.
Morgan Stanley Investment Management (MSIM) said its International Equity team, supported by the Solutions & Multi Asset team, will manage the new fund’s option strategies. The International Equity team managed around $34bn (£25.4bn, €30.2bn) of assets across its four strategies as of 30 June 2016.
Robust dividends target
The new GBEI fund will be managed from London by William Lock, Bruno Paulson and Dirk Hoffmann-Becking.
Lock, who is head of MSIM’s International Equity team, said: “We believe the GBEI portfolio’s high quality bias offers a far more robust approach to income generation than that typically offered by high dividend or income funds.
“We focus on the underlying company fundamentals and free cash flows, which means dividends are more likely to be sustainable and growing. The companies in GBEI make a high return on capital and are capital light. This means they can afford to pay out, and keep paying out, dividends to shareholders.”
As of 30 June 2016, MSIM’s main Global Brands Fund had delivered a 10.3% net annualised total return since its inception in 2000 compared with the MSCI World Net Index, which had delivered 3.8% over the same time.
MSIM, together with its investment advisory affiliates, has more than 590 investment professionals around the world and had $405bn in assets under management or supervision at 30 June 2016.