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Principal believes funds can meet IMA yield

Principal Investment Management expects all the 12 funds on its equity income white list to meet the IMA’s new yield definition by the January deadline, despite 11 funds currently falling below the target.

Under the Investment Management Association’s new definition, funds must aim to achieve a yield on distributable income in excess of 110 per cent of the FTSE All Share yield. At the beginning of July, funds would have needed a distributable yield of around 4.68 per cent to qualify.

The net dividend yield for the 12 funds on the white list, calculated at the end of June just before the list’s publication, was 3.8 per cent.

Eleven funds failed to meet the future yield target, with seven funds having a net dividend yield of less than 4 per cent at the time of the study.

Director Charles Brand says the firm did not look at the new yield regulations when unveiling its latest white list.

He says: “When we conducted the study, we had to take the sector as is, so we feel the 12 funds in the white list represent the best risk and return value at present.

“All these funds are major funds and I would be surprised if one of them left the sector following the yield requirements installed by the IMA.”

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