View more on these topics

White hopes of the equity income sector

I always look forward to seeing Principal Investment Management’s White List of UK equity income funds.

It rates funds using seven criteria based on performance, volatility and income distributed. It has been carrying out this study for 29 years and its clients have certainly profited from it.

This year, Invesco Perpetual high income and income head the list, with F&C stewardship income, Credit Suisse alpha income retail, Rathbone income, Artemis income, and Jupiter income performing well.

The remarkable fact is that, over the five years to July 1, when both the FTSE 100 and FTSE All Share indices fell, five UK equity income trusts showed returns of over 10 per cent a year, headed by Artemis income at 11.8 per cent.

Even the average income trust has outperformed the two FTSE indices over both five and 10 years.

For investors requiring income, seven trusts have shown returns of over 20 per cent, net of basic-rate tax, over five years, headed by Rathbone income, Royal Bank of Scotland equity income, Invesco Perpetual high income and Newton higher income. Rathbone income returned 22.4 per cent net.

But it must be remembered that not all UK equity income trusts performed well. Principal also produces a Black List headed by M&G income A – although even this fund produced a net income over five years to 30 June of 15.9 per cent.

Not one conventional UK equity income trust failed to beat the FTSE 100 index over the past five years and only three out of 211 general unit trusts outperformed Artemis income over five years.

My favourite funds are Artemis income and Rathbone income.

Recommended

Two points for own goal

Diane Hayter’s whole defence against Nic Cicutti’s article is an own goal. I will only pick two points:1: Only a serial committee member/do-gooder could possibly hailan increase in bureaucrats of 325 per cent (financial promotions’ team increase from eight to 34)2: Free or moderately priced assistance. Free! What planet is she on? Does she attend […]

12Bn knocked off pension deficits in July

July’s surge in equity markets and bond yields saw a fifth wiped off the pension deficits of FTSE 100 companies. This is the biggest reduct- ion in a single month since October 2003. It resulted in 12bn being cut from blue-chip pension deficits, leaving a 55bn funding gap. However, the aggregate fall in FTSE 100 […]

Is volatility dead? No, sell credit

There are several arguments that one could currently make for why credit markets look unattractive. These include signals that the US economy is in late cycle, the fact that corporate leverage has been increasing (with 2016 setting a record for the amount of global bond issuance), and that US high-yield default rates have risen considerably […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment