UK Equity Income
‘what can go wrong’ with each investment, which has brought distinct benefits.
AXA Framlington Monthly Income is the second highest ranking new entrant on the List. The fund is managed by George Luckraft. Just over half the fund is invested outside of the FTSE 100; smaller companies, such as FTSE Fledgling Index stocks, are included. This brings some liquidity concerns, but as the fund is a modest £137 million in size, these are not excessive at this time.
The Grey List The Grey List (see Table 2) can be a temporary home for a manager with an out- of-favour style or an early warning signal of a fund in decline.
The most notable entrants to the Grey List come from opposite ends of previous studies. Long-time White List incumbent the JOHCM UK Equity Income fund has slipped some way down the rankings.
Despite their accurate forecast of weaker returns for the market through 2014, Clive Beagles and James Lowen failed to turn this into successful investments. Large exposure to the energy and natural resource sectors seems to have been the main issue for the team, with much of the pain being felt in the latter half of the year.
Newton Higher Income has moved the other way. It is up to 30 on the list from 40 previously, despite a number of changes in manager and process in the last few years. Perhaps this can be seen as a sign of better things to come. Christopher Metcalfe has been in charge of the fund since March 2014 and most of the outperformance has come in the last six months or so. However, it is still early days.
The Jupiter Income Trust has also escaped from the Black List, although it remains not far from it.
The Black List The Black List (see Table 3) is for consistent underperformers and, unless remedial action is being taken, a sign for investors to look elsewhere.
Again there seems little to suggest the Scottish Widows UK Equity Income fund will experience a brighter future. It remains one of the weakest performers over the last year and that keeps it pegged firmly to the bottom of the list.
It is notable that nine of the 10 funds that filled the lowest positions on the list last time still remain there this time. In terms of performance, Aberdeen UK Equity Dividend fund (previously SWIP UK Income) has not ranked higher than 40th (of 53 names currently) in each of the last five years, leaving it second to last on the list, and only marginally better than the Scottish Widows UK Equity Income fund.
14
Table 2: The Grey List (source: Sanlam Private Wealth Income Study - January 2015) Net Dividend Net Income
Total Return 31/12/14
Yield 5 Years to 31/12/14
Fund
Schroder UK Alpha Income A Inc F&C Responsible UK Income 1 Inc
IP Income & Growth Inc
4.0 3.8
Rathbone Blue Chip Income & Growth R Inc 3.8 3.4 6.4 3.8 3.8 4.0 5.3 4.3 4.4 3.8
Fidelity Enhanced Income Inc Franklin UK Equity Income A Inc Artemis Income Inc
AXA Framlington Blue Chip Eq Inc R £ Inc Smith & Williamson UK Equity Inc Trust JOHCM UK Equity Income B GBP Inc Premier Income A RBS Equity Income 1
AXA Framlington Equity Income GBP R Inc 3.9 3.6 4.4 4.1 3.8 3.6 4.3 7.4 3.8 4.3 4.2 4.2 3.4
St James’s Place Allshare Income Inc Liontrust Macro Equity Income R Inc Newton Higher Income GBP
Aviva Investors UK Equity Income SCA Santander Equity Income Milton Income Inc
Schroder Income Maximiser A Inc Lazard Multicap UK Income Retl Inc Allianz UK Equity Income A Jupiter Income Trust
Ignis UK Equity Income Inc Schroder Income Inc
GREY LIST AVERAGE 4.2 investment)
25.1 24.1 23.8 22.6 34.7 23.5 24.5 28.1 25.8 26.8 26.8 24.3 27.0 21.9 23.1 28.4 23.3 25.0 24.4 36.3 23.4 25.5 23.6 23.9 20.8
25.5
(Based on 31/12/13 £100 to 31/12/14
1.2 2.4 4.5 3.9 4.3 6.1 3.5 3.0 3.1 0.7 1.7 2.0 0.5 1.0 3.0 5.5 2.2 4.8 4.2 2.6 1.9
-0.3 3.1 4.5 4.2
2.9
31/12/12 to
31/12/13
28.8 23.6 22.5 24.8 16.6 22.5 23.7 22.5 28.2 29.7 31.2 25.5 27.7 25.2 29.5 18.9 25.7 18.7 20.4 24.6 24.7 24.7 25.8 20.8 32.5
24.8
Capital Growth & Net Income Reinvested
31/12/11 to
31/12/12
20.4 17.6 16.5 15.5 9.0
12.2 14.0 12.9 12.2 23.6 9.4
16.9 12.5 15.2 6.2 8.5
15.5 8.8 6.9
25.1 16.5 15.4 7.3
16.7 25.3
14.4
31/12/10 to
31/12/11 1.0
-2.6 -5.6 3.5 6.4 3.4 0.1
-2.5 -9.1 -4.4 1.5 0.0
-8.4 -5.5 -1.5 0.1
-0.3 2.5 3.7
-9.5 -3.1 -4.2 -0.2
-10.2 -8.4
-2.1
Table 3: The Black List (source: Sanlam Private Wealth Income Study - January 2015) Net Dividend Net Income
Total Return 31/12/14 Fund
BlackRock UK Income A Inc NFU Mutual UK Equity Income B Aberdeen UK Equity Income A Inc River & Mercantile UK Equity Income A CF Canlife UK Equity Income B Inc GBP Santander Enhanced Income Ret Inc F&C UK Equity Income 1 Inc Kames UK Equity Income A Inc SLI UK Equity High Income Ret Inc JPM UK Higher Inc A Inc Neptune Income A Inc M&G Dividend A Inc
Aberdeen UK Equity Dividend A Inc Scottish Widows UK Equity Income A Inc
BLACK LIST AVERAGE
2.6 3.6 4.1 4.2 4.2 5.6 3.7 4.1 4.0 4.0 4.3 4.3 3.7 4.0
4.0
Yield 5 Years to 31/12/14
investment)
21.3 23.3 23.8 23.4 22.7 27.2 24.3 22.6 21.2 21.4 23.4 23.1 19.4 20.2
22.7
(Based on 31/12/13 £100 to 31/12/14
7.2 0.4
-1.5 0.2 3.0 2.8 0.2 1.6 2.9 0.6 1.2 0.5
-2.6 -1.1
1.1
31/12/12 to
31/12/13
14.7 20.3 19.6 28.1 21.0 14.2 14.2 23.3 26.9 21.8 17.1 17.6 20.5 21.1
20.0
Capital Growth & Net Income Reinvested
31/12/11 to
31/12/12 9.7
13.0 11.9 18.8 9.8
10.5 11.7 10.7 13.9 13.9 10.7 15.7 9.5 6.8
11.9
31/12/10 to
31/12/11
-5.2 1.0 0.7
-6.9 -1.7 -4.0 -3.8 -1.4 -8.9 -3.9 -6.0 -5.9 -6.6 -6.7
-4.2
31/12/09 to
31/12/10 % £%%%%%
16.4 12.1 18.2 16.0 11.9 7.1
15.8 12.3 13.0 15.1 13.6 13.6 10.2 11.7
13.3
3.4 3.0 3.4 3.7 3.2 3.3 3.3 3.5 4.4 3.7 3.4 3.8 3.6 3.8
3.5
Notes: (a) Funds are ranked using seven different criteria based on performance, volatility and the income distributed, with the most recent period of performance receiving a greater weighting. (b) All funds are in the IMA UK Equity Income sector. (c) Performance data is provided by Morningstar on a bid-to- bid basis with net income reinvested. Volatility is based on five-year performance data. Income is calculated based on £100 invested five years ago. (d) Yields are sourced from Morningstar, FT and fund providers and represent the estimated annual pay out. (e) Funds with a value of less than £20m are excluded.
We note that, despite still being placed at the top of the latest Black List, BlackRock UK Income has been the third best performer in the Income Study over the last year, marking a significant improvement
Investment Life & Pensions Moneyfacts ® March 2015
since Mark Wharrier took the helm in November 2013.
Charles Brand is Head of Portfolio Management at Sanlam Private Wealth
Volatility 31/12/09 31/12/14
to
31/12/09 to
31/12/10 % £%%%%%
17.3 18.4 18.6 12.7 8.8
11.2 11.7 20.3 16.9 16.2 12.1 14.0 17.3 18.8 16.4 8.2
12.5 10.8 9.8 8.9
15.4 14.5 9.3
16.0 8.4
13.8
3.6 2.8 3.1 3.1 2.3 3.1 3.0 3.7 3.2 3.8 3.2 3.2 3.0 2.7 3.2 3.1 3.1 3.1 2.9 3.6 3.7 3.3 3.2 3.9 3.9
3.2 Volatility
31/12/09 to
31/12/14
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