e-fundresearch.com: What was the main motivation for First Eagle Investment Management and Amundi to launch the First Eagle Amundi Income Builder Fund?
First Eagle Amundi Income Builder Fund: The genesis of First Eagle Amundi Income Builder Fund goes back to 2010 when our major distribution partners asked us if we could apply the Margin of Safety approach successfully implemented in First Eagle Amundi International Fund since 1996 (and in its underlying Global Value strategy since 1979) into an income oriented portfolio. After studying the issue we concluded that credit analysis was amenable to the same margin of safety approach, and First Eagle launched the Income Builder strategy in a U.S. fund in May 2012. We are now bringing this to the UCITS market as the same issues that face clients in the U.S. are present in the UCITS area.
e-fundresearch.com: What asset classes does the fund essentially cover and who is responsible for the overall asset allocation of the fund? Based on what key-criteria do you undertake the strategic asset allocation of the portfolio?
First Eagle Amundi Income Builder Fund: First Eagle Amundi Income Builder Fund is a core long term wealth management solution with a dual mandate. The fund seeks to deliver a meaningful level of income today while preserving and if possible growing the purchasing power of tomorrow's income stream. In order to achieve these two objectives, the fund will mainly invest in dividend paying equities and corporate bonds around the world offering an appropriate margin of safety in order to minimize the risk of permanent impairment of capital over time. The fund is managed without any constraints by country, sector, market capitalization, credit rating or index coverage. The fund's investment team, the First Eagle Global Income Builder Team, may also hold government bonds and cash when attractive investment opportunities in equities and credit with the requested margin of safety are less abundant. Moreover the fund will maintain a structural position in gold-related securities as a potential portfolio insurance policy against extreme and unpredictable market events.
The investment decisions are made in a team approach by the 4 portfolio managers composing the First Eagle Global Income Builder Team in association with the respective research analyst (20 fully dedicated equity and credit analysts). All 4 portfolio managers and the analyst in charge of suggesting the security will have to agree on the investment decision in order to initiate any new investment. However, while First Eagle imposes a high entry barrier for new investments, only one portfolio manager feeling uncomfortable with an existing position is sufficient to liquidate that holding.