Fidelity Enhanced Income Fund

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“50 fund focus with me in the studio. Today. Is michael clarke michael thank you you for joining us thank. You now michael.

Many people will already know you from money build a dividend fund. You also run the enhanced income fund can you tell me how these two funds. Differ. And what the similarities are between them.

Well enhanced income has the same stocks in it as the money build a dividend fund. The difference is the the yield. So enhanced income has a yield of seven percent..


Which is a couple of points higher than money builder dividend. We achieved the seven percent by overwriting. The portfolio. So we sell to other parties.

The right to buy the stock in the fund at a fixed price and for that we receive a premium and that s what gets you to seven percent from for four and a half. So that s the enhanced element. That s the enhanced elam. But essentially it s a uk equity fund.

It s a uk equity fund. Yes. So what sort of people might want to invest in the enhanced income fund as opposed to say the money build a dividend fund..


It s clearly intended for people who want the extra income. So that might be people who are living on on a pile of savings retired people for example. It s really designed for them. Now.

Times have been tough for people seeking income what in your view is the outlook for dividends going forward. I think you know there may be some examples where companies have difficulties paying dividends. But broadly speaking. That s not the case.

I think most uk companies are run conservatively with strong cash flow and they can afford their dividends and it may be especially if they have an international business global business. That they can increase them over time so i think the outlook for dividends is pretty secure that s going to be good news for income hunters isn t it at the moment yes. I think so now you have a very specific philosophy..


Don t you si rp can you explain exactly what that means. Yes of course. So. What it means is safety income and reasonable price.

So. The safety element means that we invest in companies of good quality. And what that means is companies. Where we can make a decent for cast about the company s trajectory and progression over the next three to five years and have some confidence in that forecast.

So we re looking for good quality companies in non cyclical non sensitive areas that areas that are not sensitive to the economy. So for example pharmaceuticals consumer type company s insurance companies companies that are stable. So that s really the first point of si rp and then the income point is the eye part of the si rpa..


We re looking for companies that can pay a decent income. Which is sustainable so not necessarily the highest yield in the market. If it s not sustainable. But a good quality yield that that where we see some possibilities of growth over time and reasonable price.

We we have to make a judgment about the price we pay. So we we value the company using various techniques. So that we don t overpay so that s how you get to si rp michael. Thank you very much thank you ” .


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