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Banking on a boost for income

John Duffield says equity income is one of the most important asset classes for New Star and he has given fund manager Toby Thompson a vote of confidence despite recent underperformance.

Thompson runs higher income, which is 48th of 72 funds over three years, returning 56.8 per cent compared with an average of 61 per cent.

Duffield says: “Equity income is the most important single sector to the man on the street because it offers a bit of income and a bit of capital gain. At Jupiter, I had William Littlewood who ran an excellent equity income fund and now they have Tony Nutt who has also done an excellent job. Invesco Perpetual have the best of all with Neil Woodford.”

“Toby Thompson did well at Newton where he was mainly first-decile. He has not been disastrous but typically second-quartile here, which is not as good as it should be.”

Duffield says Thompson’s disciplined approach sees him favour blue chips paying dividends equivalent to over 130 per cent of the FTSE’s yield. He says: “In the last three years that has meant being very overweight in the big banks, which have been disappointing. He believes it will come right and I do too, because I also think the big banks are cheap, but it has not worked yet.”

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