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UK equity income funds slide into relegation zone

Newton higher-income fund heads the latest 100-plus list of poor-performing unit trusts in Chelsea Financial Services’ relegation zone statistics.

The fund, managed by Tineke Frikkee, is one of seven funds from the UK equity income sector, comprising around £5bn of underperforming assets, in the relegation zone. New Star equity income, managed by Stephen Whittaker, is also on the list, having returned 8.2 per cent compared with a sector average of 25.82 per cent.

Chelsea derives the struggling funds through a quantitative screening basis which reveals funds in the third or fourth quartile each year for three consecutive years.

Managing director Darius McDermott says: “This is the first time that UK equity income has been so prevalent in our list and it is because as a style it has underperformed, with banks and housebuilders being decimated. Newton has played a major role in this, with the fund hit hard with losses while it has also begun to see outflows.”

The number of assets run by underperforming funds has risen to a total of £21.5bn.

Following Newton higher income as the biggest underperforming fund on the 100-plus list of unit trusts is the £2.67bn Scottish Widows corporate bond fund, while the £898m HSBC growth and income fund is third.

Chelsea has also included the names of habitual offenders, an eight-strong list of funds which has appeared in each of the past seven relegation zones.

McDermott says: “Norwich Union and Scottish Widows both appear on this list as they do in general. These are the funds which need to be looked at by management as they have been bottom of the pile for some time.”


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