Equity income was flavour of the month at the time and Luckraft had been concerned that too much money was being invested in the fund each month. Big amounts of money can take time to be invested in the manager’s preferred stocks, and this can have a negative effect on the returns for existing investors. The fund was taken off platforms and discounts that had been available on the initial charge were removed.
Over the last two years other Axa Framlington’s other income funds and sectors such as property have taken the spotlight off equity income and Luckraft is now comfortable with reopening the fund to new business qand making it available through platforms such as FundsNetwork. Luckraft joined the company in September 2002, having built his reputation at ABN Amro. He is also manages Axa Framlington’s managed income and nonthly income funds.
The equity income fund aims to provide a growing level of income and capital growth by investing mainly in UK equities and convertible shares These will comprise companies that, according to Luckraft, show above average profitability, management quality and growth prospects. Luckruft usually prefers small and mid cap stocks and adds an element of special situations to his equity income style.
The fund was hit badly by the weakness in bond markets in June and by mid and small cap shares underperforming the FTSE 100. However, Luckraft sees potential buying opportunities in high-yielding stocks as prices fall.
Some fund managers have switched to global opportunities in the equity income sector because UK dividend yields are falling, but Luckraft’s reputation alone should attract advisers and their clients to this UK fund.