A fully flexible way to invest
3 minute read
Dividends? Or growth? Actually, why not both? By having a dual focus to investing – one on companies that pay high dividends and one on companies that have the potential to pay high dividends in the future – gives investors the opportunity to seek returns without having to choose just the one route.
Who's it for? All investors
Europe is home to a rich mix of very different companies. And a lot of these companies are recognised global leaders in their markets, in areas such as technology, consumer goods, and health care. But dig even deeper and you find that some of these companies pay shareholders dividends, and some of those dividends have the potential to rise. The aim of the BlackRock Continental European Income Fund is to identify the best opportunities in this market and invest in a select number of those companies.
When it comes to investing in companies that pay dividends, it’s important to keep an open mind. If you just focus on the biggest dividend paying companies, it will lead you towards being invested in areas such as utility companies, financials, and telecommunication companies (which are typically the companies which pay the largest dividends). This could be construed as being a risk, due to the reliance on this small part of the market continuing to pay dividends.
The approach at BlackRock involves looking beyond these ‘obvious’ dividend paying companies. They do this by investing in two very distinct parts of the market. First, they look to invest about half the fund in companies which are paying out high dividends, and which they believe have the strength to continue to pay those dividends in the future. The second half of the fund is invested in companies which may not be paying a high dividend today, but are increasing their dividends at a fast rate.
These companies have the potential to become the high dividend paying companies of the future. The result is a fund that is more diversified than a typical dividend fund, and therefore has the potential to deliver to investors.
Investment returns from the fund should not come just from the dividends alone. By taking this dynamic approach to investing, the fund aims to deliver long-term growth from a combination of the dividends paid out and hopefully also from the increase over time in the value of your capital invested. And whilst there’s no guarantee of this, the prospect of income and growth is an attractive proposition for many investors.
Europe is a very interesting place to invest, and while no one knows where markets are heading from here, this could be a fund worth considering if you are thinking of investing in Europe and find the dividend approach interesting. There are also four more funds on the Barclays Funds List which focus on a more ‘general’ approach to investing in Europe. Find out more information on these funds.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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