Allianz RCM European Equity Income

A unique opportunity to invest in European blue chips

The recent downturn in equity markets has left many robust and well-capitalised European companies significantly undervalued. We believe that this has opened a historically unique window of opportunity for investments in strong and successful companies which continue to generate relatively high and sustainable dividends.

 

Backed by our world-class global research platform, the fund management team focuses on the highest quality European companies. In the current environment, we believe that it is just as important to avoid picking companies which disappoint, as it is to pick strong and stable companies which can deliver the best returns.

Equities can provide a reliable source of income

Investors are currently penalised for holding cash, and suffering from some of the lowest interest rates in history. This fund aims to generate a high and sustainable level of dividend income, by investing in high quality European companies with proven track records and backed by strong and stable cash flows.

The power of equity income

Historically, the majority of returns from equities have come from dividends, not share price growth. Since 1977, the total return from equities – income and capital growth – has significantly outperformed that of government bonds and cash.(1) In fact, investors in high-yielding stocks who reinvested the dividends would have seen a higher than average return than for the broader market.(2)

Diversify away from bonds

We believe that while bonds have a place in any well-balanced portfolio, in the current environment, equities provide better protection against the possible future return of inflation than bonds, which are more vulnerable in a high-inflation environment. Equities should also offer superior capital returns.

 

(1) Source: Datastream, RCM
(2) Source: RCM Source: Dimson, Marsh and Stauton (ABN AMRO) and Triumph of the Optimists, Princeton University Press, 2006