Aegon Global Equity Income

The strategy is built on the belief that dividend income is a key driver of long-term equity returns, and that companies capable of growing dividends tend to deliver stronger and more resilient performance over time. The process is structured into three stages: screening, fundamental analysis and portfolio construction.

The starting point is the global equity universe, which is first filtered for investability, removing companies with insufficient scale or liquidity. This is followed by a proprietary dividend screen which applies six criteria, including dividend yield relative to the market, dividend sustainability (cover and balance sheet strength), expected dividend progression, and return on invested capital. This reduces the opportunity set to roughly 400 stocks (around 10% of the global universe) which forms the core research universe for the team.

The team spends the bulk of its time getting to know this filtered universe in detail, supplemented by ideas from the wider Aegon equities team and by direct company engagement. New ideas are typically driven by change, whether in macro conditions, company strategy, earnings outlooks or dividend policy, which the team believes is often mispriced by the market in the short term.

The second stage of analysis combines three perspectives: business quality, valuation, and earnings momentum. Business quality assesses the durability of returns and dividend capacity; valuation is considered as a range-based assessment of fair value rather than a single price target; and momentum indicators, including earnings revisions, help to validate or challenge the fundamental view and improve timing.

The final stage is portfolio construction. The portfolio typically holds 40–50 stocks and is built through debate within the core team. Position sizing balances three considerations: fundamental conviction, contribution to portfolio yield and impact on overall risk.

A key feature of the process is the use of yield “buckets”, which helps balance the portfolio across different types of dividend exposure: a core allocation sits in a 2–4% yield range, complemented by lower-yielding structural growth companies and higher-yielding defensive holdings. The resulting portfolio is deliberately concentrated enough for conviction, but diversified enough to ensure balance across styles and cycles, with an average holding period of around three years.

Risk is managed as an integral part of the process. A dedicated portfolio risk team provides independent oversight using the BlackRock Aladdin system, with regular monitoring of portfolio characteristics including tracking error, Value at Risk (VaR) and stress testing scenarios.

The portfolio is constructed with an emphasis on large-cap, highly liquid companies, which helps keep liquidity risk low. Cash is typically below 3%, with the portfolio remaining close to fully invested.

Stock-specific risk is kept deliberately high, reflecting the team’s focus on fundamental research and security selection. Diversification is maintained through controls on exposures, with sector and regional deviations generally kept within approximately +/-10% relative to the MSCI All Country World Index. This helps ensure that performance is driven primarily by stock selection rather than unintended macroeconomic or geographic bets.

ESG considerations are fully integrated into bottom-up stock selection through a formal three-stage framework. For each company, analysts assess performance on material ESG factors, the significance of these factors to the overall investment case and the direction of travel over time. The fund achieved SFDR Article 8 status in 2022 and explicitly targets a portfolio weighting at least 20% higher than the MSCI All Country World index in stocks rated AAA and AA for ESG by MSCI. Active ownership is a central part of the approach, with engagement led by Aegon's Responsible Investment team and tracked against predefined milestones.