Many investors naturally prefer familiar investment options, which can lead to portfolios that are heavily focused on a single country or region. This can feel like a sensible approach, particularly during periods of market uncertainty.
Over time, however, concentrating too much in one area can introduce hidden risks. Income may become reliant on a narrow group of industries, tied closely to the fortunes of one economy, or exposed to movements in a single currency. If conditions change, this lack of balance can make income streams less reliable.
Broadening the investment lens to include other regions can help spread these risks. North America, in particular, offers a compelling alternative. Its equity market is broad, deep, and underpinned by a wide range of industries with long‑term structural drivers. For income‑focused investors, the attraction is not simply yield, but the stability and diversification that come from exposure to the world’s largest economy.
Because stability does not come from standing still.
Diversification across regions, sectors and currencies is one of the most effective ways to manage risk over the long term. North American equities bring exposure to a different economic cycle, a broader sector mix, and a corporate culture that increasingly balances growth with shareholder returns. Rather than replacing other regional allocations, North American exposure can add another layer of resilience, helping smooth returns across market environments.
The US equity market stands apart for its scale and diversity. Unlike more concentrated markets, it offers meaningful exposure across healthcare, financial services, utilities, infrastructure, consumer businesses and technology – many of which are under‑represented elsewhere. This breadth matters for income investors. It means access to companies whose cash flows are supported by long‑term demand drivers such as ageing populations, essential services, infrastructure investment and recurring consumer spending. These characteristics can help underpin dividends through different phases of the economic cycle.
The strength of North American income lies not only in dividend policy, but in the nature of the businesses themselves.
Lamar Advertising is a good example. Operating billboards and transit displays across the US, it benefits from high barriers to entry and long‑term site agreements. Despite being a physical advertising business, its revenues are supported by essential local infrastructure and recurring demand, generating durable cash flows.
Financials also play a central role. Banks such as PNC provide exposure to domestic US lending, while firms like Morgan Stanley bring diversification through wealth management and capital markets. These business models often behave differently from their international peers, helping balance portfolio risk.
Utilities and infrastructure, including Xcel Energy and Enbridge, add defensive qualities. Their regulated or long‑duration assets can help dampen volatility and support income during periods of market stress.
Together, these companies illustrate how North American equities can deliver income supported by stability, not speculation.
Want to see the full picture? Explore NAIT’s complete list of holdings and learn more about the companies behind the portfolio.
North American exposure brings more than dividends. Many US companies operate globally, yet report earnings in US dollars – a currency that has historically acted as a stabiliser during periods of global uncertainty. For investors based outside the US, this currency exposure can add an additional layer of diversification. Crucially, this is not about turning away from other markets. For those with existing regional allocations -including the UK – North American income can complement rather than compete, broadening sector exposure and reducing reliance on any single dividend culture.
Resilient income portfolios are rarely built around one market alone. By combining different regions, industries and business models, investors can reduce concentration risk and create income streams that behave differently over time.
North American equities offer a distinctive mix: scale, sector diversity, evolving dividend practices and exposure to long‑term economic drivers. While no strategy can eliminate risk, incorporating these strengths can help build a more balanced and durable approach to income investing.
For a deeper perspective on the year ahead, explore the fund managers’ market outlook and insights here.
Important information
Janus Henderson Fund Managers UK Limited was appointed as the AIFM of the North American Income Trust with effect from 1 August 2024. Prior to that date, the North American Income Trust’s AIFM was abrdn Fund Managers Limited and all information contained in this document should be considered accordingly.
