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Morgan urges IMA to be flexible on yields

JP Morgan head of UK retail sales Michael Parsons believes the Investment Management Association’s new UK equity income requirements should be flexible in the current volatile market conditions.

He says UK equity income managers are faced with a difficult challenge as some clients want performance in these sorts of markets rather than yield.

The IMA has looked to tackle yield concerns by stating that UK equity funds must achieve a yield on distributable income in excess of 110 per cent of the FTSE All Share yield.

JPM’s premier equity income and UK strategic income funds are both in line with the new requirements.

Parsons says: “There is no point in having a sector if you do not look to achieve that 110 per cent target but in markets like these, you have to have a degree of flexibility but that is a decision for the IMA.”

Wilson Dean director Nick Lincoln says: “When people go into UK equity income, they expect funds with dividends but if yields get slashed as they do in markets like these, some flexibility is by no means a bad thing. I would look to the six or 12-month rolling yield as a more accurate measurement.”

Investment, p26

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