Kip 25

Janus Henderson Global Equity Income (HFQTX) Joins the Kip 25

HFQTX's investments in dividend payers have helped it hold up better than its foreign-value peers.

Our search for a foreign fund with a value tilt to replace Oakmark International (OAKIX) in the Kiplinger 25, the list of our favorite no-load mutual funds, has been difficult. Part of the reason: Bargain-priced foreign stocks have lagged their growth-oriented counterparts for seven of the past 11 calendar years, as well as so far in 2020. All told, the typical large-company foreign-value fund has logged a negative 2.8% annualized return over the past three years.

In the end, we didn't abandon value-style investing, but we found a fund that can soften the sting of lagging returns for this investing style.

Janus Henderson Global Equity Income (HFQTX, $6.01) invests in dividend-paying stocks, which has helped it hold up better than its foreign-value peers in rough-and-tumble times.

The fund aims "to provide a consistently high level of income while investing in overseas markets with a value bias," says Ben Lofthouse, one of HFQTX's three comanagers. "We look for the dividend to be sustainable."

To that end, firms with strong balance sheets, steady profits and cash flow are ideal for the fund.

"Profitable companies have downside protection when things don't go as well," Lofthouse says.

A chunk of HFQTX is in utilities, which is a traditional value sector, but the draw – renewable energy – is decidedly 21st century. British American Tobacco (BTI), German utilities firm RWE (RWEOY) and U.K. telecom Vodafone Group (VOD) are the fund's top holdings.

Valuation matters, of course. But in recent years, the managers have put aside some value measures, such as share price in relation to book value (assets minus liabilities), in favor of other gauges, such as the price-to-cash-flow ratio, that they say are better predictors of future returns.

The managers are wary, too, of relying on mean reversion – the theory that a cheap stock will eventually rebound to its historical average valuation. Disruption in many industries means "past profitability may be peak profitability," Lofthouse says. "Looking forward as value investors has become very important."

Relative to other large-company foreign-value stock funds, Global Equity Income shines. Over the past three years, HFQTX ranks among the top 25% of its peers, albeit with a negative 2.0% annualized return. It currently yields 7.9% based on its trailing 12 months of payouts, a common measure for equity funds.

Most Popular

Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How
social security

Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How

It’s always smart to maximize your Social Security benefits, and if you are divorced, one way to do that might be to take them based on your ex’s earn…
May 13, 2021
Refunds for $10,200 Unemployment Tax Break to Begin This Week
Coronavirus and Your Money

Refunds for $10,200 Unemployment Tax Break to Begin This Week

The IRS will start issuing automatic refunds in mid-May to people eligible for the unemployment benefit tax exemption.
May 14, 2021
18 Worst Things to Buy at Dollar Stores
spending

18 Worst Things to Buy at Dollar Stores

These discount retailers stock plenty of bargains, but some of the merchandise isn’t worth the buck.
May 14, 2021

Recommended

American Century Small Cap Value (ASVIX) Joins Kip 25
Kip 25

American Century Small Cap Value (ASVIX) Joins Kip 25

American Century's small-cap-focused ASVIX consistently delivers high returns with average risk, and bears little resemblance to its benchmark.
April 30, 2021
The Disturbing Conflicts of Interest in Target Date Funds
mutual funds

The Disturbing Conflicts of Interest in Target Date Funds

Are you one of the 40 million folks who has a target date fund in your 401(k)? It could be costing you 21% in returns over the course of your career, …
April 30, 2021
The Kip 25: The Best Low-Fee Mutual Funds
mutual funds

The Kip 25: The Best Low-Fee Mutual Funds

The key to building wealth long-term is buying high-quality, low-cost mutual funds run by seasoned stock pickers. Here are our favorites: The Kiplinge…
April 29, 2021
35 Ways to Earn Up to 10% on Your Money
Investing for Income

35 Ways to Earn Up to 10% on Your Money

Yields are beginning to lift off. We found great deals for every level of risk.
April 29, 2021