RWC Partners' new global equity income team, which is headed up by Nick Clay, will launch a high-conviction global equity income fund during the final quarter of this year.
The fund will adopt a similar philosophy and investment process to Clay's BNY Mellon Global Income fund, which he managed for eight years up until April 2020 and at one point grew to an AUM of £10bn with a dividend yield growth of 5.9% per annum over its last five years.
Over Clay's tenure, the fund acheived a total return of 111.5% compared to its average peer's return of 77.8%, according to data from FE fundinfo.
The fund will have a concentrated portfolio of stocks and a high active share, and will aim to provide strong risk-adjusted returns to investors by holding companies with high yields trading on attractive valuations.
Gary Tuffield, head of European sales at RWC, said: "Investors are sounding the alarm bell around the extreme valuations of tech stocks, questioning the sustainability of earnings from the so-called FAANGs and whether they are in bubble territory.
"In many ways, this environment echoes the ‘irrational exuberance' coined by Greenspan in the late 1990s, which served as a precursor for the dotcom bust."
"In addition, with interest rates anchored at 300-year lows and credit spreads back to pre-pandemic levels, investors are being woefully compensated for the significant rise in defaults that we are witnessing and a genuine lack of yield from deposit accounts.
"With many companies currently aggressively slashing dividends to fund short-term cash flows, the need for a disciplined and proven process to identify quality companies that have the ability to not only generate, but sustain a reasonable level of dividend income, is needed now more than ever."
Clay, co-manager Andrew MacKirdy and colleagues Colin Rutter and Robert Canepa-Anson left Newton Investment Management to join RWC Partners at the end of March this year.
The fund has since been headed up by Ilga Haubelt, who had previously served as head of equity opportunities at the firm.
Tuffield added: "Nick, Andrew, Robert and Colin, with over 90 years of combined industry experience, are recognised as one of the most experienced portfolio management teams in the industry and we believe they, via their process, can exploit opportunities that are beginning to arise, by seeking to deliver investors a safe and consistent place to generate a differentiated return stream, with an attractive source of income from a portfolio of global equities".