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A wise choice for income

Wise Investment – Evenlode Income Fund

Type: Oeic

Aim: Income and growth by investing in undervalued UK equities

Minimum investment: Lump sum £1,000, monthly £50

Investment split: At least 80% in UK equities, up to 20% in overseas equities

Isa link: Yes

Charges: Initial 4%, annual 1.5%

Commission: Initial 3%, renewal 0.5%

Tel: 0845 8033433

Wise Investment has introduced a UK equity income fund for former Rathbones manager Hugh Yarrow. The evenlode income fund will comprise 20 to 30 stocks of quality companies that are undervalued and able to produce income. It will have an initial target yield of 4.3 per cent, which will have the potential to rise over time.

Chadney Bulgin partner Bruce Bulgin says: “This is a new addition to the equity income sector. Evenlode is managed by Hugh Yarrow, with the assistance of Ben Peters acting as technical analyst.  Hugh worked with Carl Stick at Rathbones and for many years Carl has had a great deal of success in the equity income sector, though his star has waned somewhat over the past year or so.”

Bulgin points out that the fund management group, Wise Investment, is a small and specialist operation. He says Yarrow is concentrating on a core number of 20 to 30 stocks which means that there should be an in-depth knowledge of each company.  “The fund is aiming for a yield of 4.3 per cent, which is well in excess of the yield from the index. There is an emphasis on sound businesses with good cash flow that will generate profits on an ongoing basis and with low risk.  This is a sensible strategy and is coupled with the selection of companies that are likely to continue to deliver,” says Bulgin.

Looking at the charges, Bulgin regards them as reasonable for an actively managed fund, with 3 per cent of the initial 4 per cent change being paid as IFA commission, and 0.5 per cent of its 1.5 per cent annual management charge paid as renewal commission. “This is a traditional long only fun and there is no performance fee,” he says.

Considering the potential drawbacks of the fund, Bulgin says: “As a small specialist fund manager, Wise does not have the research and analytical back up offered by the bigger and more established investment houses. If Yarrow’s stock picks and investment strategy work, then all will be well and good, but there must also be some question as to the level of back up available.”

Bulgin also thinks the equity income sector is crowded. In addition to the Rathbone Income funds, he says there are the huge and well established funds from Jupiter and Invesco Perpetual, which have been delivering the goods for years.

“The main competition will come from the established equity income funds so it may be difficult for evenlode to gain traction and to attract significant levels of new money.  It is certainly a bold move to introduce a new fund against a backdrop of market consolidation and uncertain financial markets – though we have seen a strong recovery in recent months.”

Summing up Bulgin says: “In many ways Wise is to be commended for launching evenlode. It is certainly positioned in a different way from many other income funds and should Hugh Yarrow’s investment strategy come off then investors should reap handsome rewards.  It is to be hoped that evenlode will be available on the major investment platforms.”


Suitability to market: Good

Investment strategy: Good

Charges: Good

Adviser remuneration: Good

Overall 8/10


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