The investment managers who managed to score stellar results with their equity income funds last year – and those which had an annus horribilis – have been revealed by wealth manager Sanlam today.
The LF Miton UK Multi Cap Income fund, run by Gervais Williams and Martin Turner, topped the performance rankings for the third consecutive study.
Meanwhile the HSBC Income loitered around the lowest performers yet again, beaten only by the Aberdeen UK Equity Income fund at rock bottom.
"Given the current low interest environment, there is a lot of reasons to be excited about UK equity income funds, with a number of them currently yielding between four per cent and six per cent a year," said Sanlam's chief investment officer Philip Smeaton.
"One element that makes the income market attractive is the UK’s exposure to overseas earnings. A large proportion of large cap companies in the UK generate their earnings from overseas, with some benefiting even further by paying dividends in dollars or euros.
While Brexit has presented a challenge to the UK economy, the sudden depreciation of sterling has meant those stocks have increased income payments.
The performance of funds is based on metrics including absolute income generated over the past five calendar years, capital growth for each of the past five 12-month periods and volatility over the past five years.
Sanlam then orders the funds into a superior "white list", a "grey list" which is a "temporary home for a manager with an out-of-favour style or an early warning signal for a fund in decline” and the "black list" of consistent underperformers.
The white list
The top list has remained relatively stable, with only three of the lower funds moving out. The LF Miton UK Multi Cap Fund topped the rankings yet again, as it has consistently since it became eligible for entry this time last year.
Thomas Moore’s SLI UK Equity Income Unconstrained Fund has continued to firm up its reputation since a dramatic fall in 2016, when it placed last in terms of performance. The fund has since delivered on its mandate, and this time moved up two places to hold the middle of the white list.
There were three new entrants into the white list – strong performance helped the RBS Equity Income climb 13 places, following its 14-place fall in January 2017, while Man GLG UK Income climbed into the higher rankings. When the fund entered the study in 2016, it was right at the bottom of the black list, suggesting Henry Dixon has finally managed to turn it around since taking lead manager role in 2013. Lazard Multicap UK Income was the final contender to creep into the white list.
|The full white list|
|LF Miton UK Multi Cap Income|
|AXA Framlington Monthly Income|
|Marlborough Multi Cap Income|
|Royal London UK Equity Income|
|SLI UK Equity Income Unconstrained|
|MI Chelverton UK Equity Income|
|Majedie UK Income|
|Premier Monthly Income|
|RBS Equity Income|
|JOHCM UK Equity Income|
|Man GLG UK Income|
|Lazard Multicap UK Income|
The grey list
The Unicorn Income Fund, which is biased towards smaller companies, had a strong 2017 but was held back by its volatility score due to poor performance in 2016.
The Threadneedle UK Equity Income Fund, on the contrary, 18 places into the grey list due to a bad 2017. The fund, run by Richard Colwell, is the highest ranking Threadneedle fund, as Threadneedle UK Equity Alpha Income and Threadneedle UK Monthly Income also both rank in the grey list.
The Santander Enhanced Income Fund heaved its way up the grey list, rising 21 places to make it the year's top climber. The fund has tended to pay out a high amount of income.
But Kevin Murphy and Nick Kirrage’s Schroder Income Fund was the took the title for the largest fall the other way, as it has recently become one of the poorest income payers.
|The full grey list|
|Franklin UK Equity Income|
|Aviva Investors UK Equity Income|
|FP Miton Income|
|Unicorn UK Income|
|Santander Enhanced Income|
|MI Downing Monthly Income|
|Old Mutual UK Equity Income|
|F&C Responsible UK Income|
|Troy Trojan Income|
|Schroder Income Maximiser|
|Santander Equity Income|
|Threadneedle UK Equity Income|
|Smith & Williamson UK Equity Income|
|Kames UK Equity Income|
|River & Mercantile UK Equity Income|
|Fidelity MoneyBuilder Dividend|
|JPM UK Higher Income|
|Liontrust Macro Equity Income|
|Threadneedle UK Equity Alpha Income|
|Threadneedle UK Monthly Income|
|Jupiter Income Trust|
|Allianz UK Equity Income|
|Schroder UK Alpha Income|
|BlackRock UK Income|
|Newton UK Income|
|SLI UK Equity High Income|
|L&G UK Equity Income|
|Fidelity Enhanced Income|
|Janus Henderson UK Equity Income & Growth|
The black list
The list of poorest performers continued to be peppered by the same repeat offenders, with the exception of two new entrants.
These were the Ardevora UK Income Fund, which has had a challenging 2016 and 2017 leading to a 28-place fall, and the UBS UK Equity Income Fund.
The Scottish Widows UK Equity Income Fund, the HSBC Income Fund and the Aberdeen UK Equity Income Fund continued to bring up the rear.
|The full black list|
|LF Canlife UK Equity Income|
|NFU Mutual UK Equity Income|
|Ardevora UK Income|
|AXA Framlington Blue Chip Equity Income|
|Castlefield BEST Income General|
|UBS UK Equity Income|
|Invesco Perpetual Income & Growth|
|F&C UK Equity Income|
|Rathbone Blue Chip Income And Growth|
|Scottish Widows UK Equity Income|
|Aberdeen UK Equity Income|