View more on these topics

Best of British

UK equity income funds generally outperform UK growth funds over longer periods although in the short term, when there is a bull market, as in the past year or so, the latter usually do better.

Also, while UK equity income funds are a little more risky than bond funds, they have always outperformed over periods of 10 years or more.

Over the five years to January 15, 2006 – when growth funds showed a return of 8.1 per cent and income funds 32 per cent – the average bond fund did outperform but by less than 1 per cent. Over 10 years, UK equity income funds outperformed growth funds by over 44 per cent points and bond funds by over 47 per cent.

UK equity income funds are also much less volatile than growth funds and are likely to show a rising income over the years as dividends increase.

Corporate UK continues to offer good conditions, including stable inflation and interest rates, and a resurgence in merger and acquisition activity is driving dividends up.

The outstanding managers in this sector are Neil Woodford of Invesco Perpetual, whose high income and income funds have performed exceptionally well, both being up over 68 per cent over five years, and George Luckraft, who runs Framlington’s equity income and monthly income funds.

Anthony Nutt of Jupiter income has also scored consistently well, as has Karen Robertson, who manages Standard Life Investments’ UK equity high income fund.

One oddity in this sector, being very high risk, is New Star’s strategic income fund, which invests mainly in the income shares and zeros of investment trusts. Over the past three years, the fund has shown returns of 150 per cent. However, while Paul Craig is an excellent manager, this trust is only for gamblers.


Multi-manager View: Take your pick

In the fund management department of Hargreaves Lansdown we believe there are three drivers to equity fund performance – size bias, style bias, manager’s stockpicking abilityBy size, we are considering the fund’s exposure to small companies, mid-sized companies and large companies. By style, we are talking about the fund’s exposure to high-yielding stocks or lower yielding stocks.

Fidelity learns from mistakes

Further to Martin Blackie’s letter in last week’s Money Marketing about his recent unfortunate experience with Fidelity International, let me first say how sorry we are that he has has not received the standard of service which he should rightly expect from Fidelity. Second, let me say that we take such incidents extremely seriously. On […]

Revenue relents on Standard tax

The Revenue has lifted a tax threat facing Standard Life policyholders. A-Day rule changes would have meant with-profits pension clients being taxed immediately at 40 per cent on their demutualisation windfalls, even for members who are lower-rate or nil- rate taxpayers. Standard lobbied HMRC after spotting the anomaly and the Revenue has set out draft […]

Tory fears over advice

Conservative MPs say that problems over the funding of advice and the regulatory framework of the NPSS need to be addressed if consensus is to be reached on pension reform. Speaking ahead of a Parliamentary debate on pensions, Tory Shadow minister for work and pensions Nigel Waterson says Turner’s recommendation for an advice-free NPSS model […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm