Introducing the Artemis Monthly Distribution fund
The Artemis Monthly Distribution fund is a straightforward way to access the income-generating potential of a carefully chosen mix of bonds and equities. At a time when investor demand for income is clear, it uses the dividends and interest payments from equities and bonds with the aim of generating a regular monthly income for investors.
Mixing bonds and equities, with global exposure
The fund typically holds 60% bonds and 40% equities. The fund combines the best ideas from the Artemis Strategic Bond fund, managed by James Foster, and the core income ideas from the Artemis Global Income fund, managed by Jacob de Tusch-Lec. Both funds are on the Chelsea Selection. Blending the two offers some of the capital and income growth potential of equities, along with the greaterpredictability of a bond’s coupon rate.
The fund has a significant level of exposure to overseas equities and bonds, therefore providing global diversification. This makes it a fund that can complement, rather than replicate, investors’ existing holdings.
Focusing on income
James and Jacob aim to generate a healthy and sustainable yield, while also providing capital growth. They are aware that economic conditions may change and so are prudent in their search for income, balancing risk and reward.
Actively managed
The fund draws on the expertise of Artemis’ bond and equity specialists. It is actively managed by James and Jacob. Their differing, but complementary, perspectives allow them to identify where the value resides in a company’s capital structure: in some cases, a company’s bonds will offer a better return than its shares; in others, owning its equity will represent a better opportunity.
Artemis' view is that close coordination and collaboration on investment ideas and portfolio construction can deliver superior risk-adjusted returns compared with a bond manager and an equity manager working independently of each other. This is an important advantage of the Artemis Monthly Distribution fund over many of its competitors in the sector.
A cautious approach to investing
James and Jacob take a cautious approach to investing. They look for value in the capital structure of a company and invest where the reward is greatest. There is little correlation between bond and equity names and they undertake a credit assessment on individual bonds, looking for those that offer the most value, given the level of risk involved.
In fixed income, James allocates tactically between gilts, corporate bonds and higher risk corporate bonds (high yield bonds) with a view to generating a good income. This will tend to bias the portfolio towards high yield and corporate bonds. In equities, Jacob allocates between geographies and sectors
Why the Artemis Monthly Distribution fund?
At a time when interest rates remain at an all-time low and look likely to remain low for some time, the demand for income is clear. By investing in a relatively cautious, globally diversified portfolio of equities and bonds, the Artemis Monthly Distribution fund aims to provide long-term capital growth and a regular income. Performance, while no guarantee as to future returns, shows that the fund has, so far, delivered.
Want to learn more? Watch a filmed interview with James and Jacob
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Risk warnings
To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from chelseafs.co.uk or artemis.co.uk.
The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.
The fund’s past performance should not be considered a guide to future returns.
The payment of income is not guaranteed.
Because one of the key objectives of the fund is to provide income, the annual management charge is taken from capital rather than income. This can reduce the potential for capital growth.
The fund may use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset) for investment purposes, including taking long and short positions, and may use borrowing from time to time. It may also invest in derivatives to protect the value of the fund, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, if the price of the underlying asset rises in value, the fund will lose money.
The fund may invest in emerging markets, which can involve greater risk than investing in developed markets. In particular, more volatility (sharper rises and falls in unit prices) can be expected.
The fund may invest in fixed-interest securities. These are issued by governments, companies and other entities and pay a fixed level of income or interest. These payments (including repayment of capital) are subject to credit risks. Meanwhile, the market value of these assets will be particularly influenced by movements in interest rates and by changes in interest-rate expectations.
The fund may invest in higher yielding bonds, which may increase the risk to your capital. Investing in these types of assets (which are also known as sub-investment grade bonds) can produce a higher yield but also brings an increased risk of default, which would affect the capital value of your investment.
The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.
The historic yield reflects distribution payments declared by the fund over the previous year as a percentage of its mid-market unit price. It does not include any preliminary charge. Investors may be subject to tax on the distribution payments that they receive.
The additional expenses of the fund are currently capped at 0.14%. This has the effect of capping the ongoing charge for the class I units issued by the fund at 0.89% and for class R units at 1.64%. Artemis reserves the right to remove the cap without notice.
Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.
Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.
Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.