Leo Acheson: JPMorgan Income Builder and Berwyn Income share similarities on the surface. However, if you look beneath the hood, the funds are very different from one another.
As far as similarities go, both funds invest across a wide range of income-producing asset classes--such as dividend-paying equities, convertibles, preferreds, investment-grade and high-yield corporate bonds, and Treasuries. They both offer attractive price tags and earn Morningstar Analyst Ratings of Bronze.
That said, their strategies and portfolios differ significantly. First of all, JPMorgan's strategy has consistently offered a higher yield. The managers definitely care about asset class valuations, but they also stretch for yield where possible. The fund has yielded 3.8% over the last 12 months. Although Berwyn Income will only invest in income-producing securities, the managers care a lot more about finding attractive valuations than they do about earning a high yield. During the last 12 months, the fund has yielded just 1.6%.
The two funds also have very distinct portfolios. JPMorgan Income Builder is a fund of underlying managers. About a dozen distinct JPMorgan managers run underlying sleeves of the fund, which has led to a large portfolio of more than 2,000 securities. It also has a global tilt, with almost 40% invested overseas, and a higher equity weight, with about 45% invested in stocks. Berwyn Income has a much more compact portfolio. A team of three selects securities for the fund; currently, there are only 100 holdings in the portfolio. The fund invests almost exclusively in the U.S., and it won't invest more than 30% in stocks.
We think both funds represent strong options for investors seeking a multi-asset income fund, but their distinct approaches and portfolios will appeal to different investor bases.