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.