Choosing to invest in global equities via an income fund does not necessarily protect investors from correlation risk, data from FE Analytics has shown.
For example, investors who have an S&P 500 tracker shouldn’t assume that by adding an income-paying strategy to the mix, they are necessarily diversifying away from the broader market risk that they are exposed to with the premier US index.
Although income funds are usually perceived to be more defensive because they invest in long-established, dividend-paying businesses, this isn’t always the case.
Indeed, over the past five years, the majority of IA Global Equity Income funds have moved in tandem with the tech-heavy US market.
In this study, we highlight the funds most and least tied to the S&P 500 since 2020.
Source: FE Analytics
At 0.4, Schroder Global Equity Income topped the list of funds with the least correlation to the US market. It doesn’t surprise, therefore, that it has been recommended as a good fund to balance out the risk of the artificial intelligence bubble bursting.
It has a lower weighting (around 35%) in the US, with a large regional overweight to the UK, Japan and Europe. Its top holdings include healthcare majors GSK and Pfizer, UK bank Standard Chartered, Spanish energy business Repsol and German tyre manufacturer Continental.
Next up was the First Trust Global Equity Income UCITS ETF (exchange-traded fund), with a correlation of 0.42. This vehicle was one of the few in the IA Global Equity Income sector that managed to protect investors from the ‘Trump slump’ both in 2022 and 2025.
It tracks the Nasdaq Global High Equity Income index, which selects companies from the Nasdaq Global index using criteria such as liquidity, dividend yield and the ability to increase dividend payouts. The $47m fund has a 4.06% yield, distributed quarterly.
In third position, with a 0.49 correlation, was Kempen (Lux) Global High Dividend. This fund invests in companies with an above-average dividend yield at the time the company is purchased for the first time and contains around 70 equally-weighted investments. Its highest allocations are to financials (25.1%), consumer staples (11%) and healthcare (10%).
Other notable names include James Harries’ £452m Troy Trojan Global Income (correlation: 0.52); the £3.9bn, five FE fundinfo Crown-rated Artemis Global Income, managed by Jacob de Tusch-Lec and James Davidson; and the £1.5bn IFSL Evenlode Global Income (0.63), whose managers Ben Peters and Chris Elliott were praised by Square Mile analysts for their “highly ambitious and collegiate” work ethic.
Source: FE Analytics
Moving on to the bottom end of the table, the performance of Fidelity Global Quality Income UCITS ETF followed that of the S&P 500 by a factor of 0.93 – the highest in the peer group.
It has a 28.2% allocation to information technology names, with Nvidia, Apple, Microsoft, Alphabet, Broadcom and Meta all appearing in its top 10, and yields 1.84% annually (paid quarterly).
At 0.91, Mirabaud Global Dividend had the second-largest correlation in the sector. It is a high-conviction fund that adopts a topdown approach in identifying themes which manager Paul Middleton believes will act as a tailwind, especially in lowgrowth cycles.
Square Mile analysts rank it for its “strong dividend growth profile” and “higher yield than its comparator index”.
In third position, Nuveen Global Dividend Growth had a 0.9 correlation. Managers David Park and David Chalupnik maintain a 15 percentage points underweight to the US against the MSCI World index, which serves as benchmark, but the country is still the largest geography for the fund, at 57.6%.
Other recognisable names in the list included the £721m JPM Global Equity Income fund (0.86), managed by FE fundinfo Alpha Manager Helge Skibeli, Sam Witherow and Michael Rossi; Jupiter Merian Global Equity Income, run by Alpha Manager Amadeo Alentorn; and Richard Marwood’s Royal London Global Equity Income.
Previously in this series: the funds most and least tied to the S&P 500 in the IA Mixed Asset sectors, IA Flexible Investment, and the unexpected fund sectors with high and low correlations to the S&P 500.