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Investing giants relegated in league table of income funds
Popular funds from Jupiter and Newton have been relegated to a 'black list' of equity income funds
A league table of equity income funds has relegated two of the most popular choices with investors to its “black list”.
The £2bn Jupiter Equity Trust and the £1.9bn Newton UK Income fund slipped into the “black list” of the Sanlam Private Wealth Income study, which ranks UK equity income funds, after compilers conducted a half-year review. You can see the full ranking below.
They are the eighth and ninth largest respectively of 89 funds in the Investment Association's UK equity Income sector.
Equity income is the best selling of all investment fund sectors. The big attraction is the cash it pays out to investors – at least 10pc higher than the yield on the FTSE All Share index.
It also appeals as it can prove less volatile than other sectors because a greater proportion of the total return is made up from dividends. The companies in which the funds invest tend to have track records of maintaining their dividends, which encourages management to take extra care of the balance sheet.
The study, which has been running for more than 30 years, also includes a “white list” of funds regarded as the most consistent performers, and a “grey list” of funds that rank in the middle. The rankings are based on past performance, with greater prominence given to recent years, as well as taking account of volatility.
“The methodology is designed to cut through the noise. It should filter out the funds that burn brightly and then fade while also making sure the manager who delivers a stable return is rewarded”, said Charles Brand, head of portfolio management for Sanlam.
He added: "The lists are backward looking, of course, but funds that feature in the white list tend to be well run and continue to do well. We suggest investors not get hung up on the precise rankings but consider those funds that have consistently featured in the list."
Funds with less than £20m under management are excluded, as are those that have been running for less than five years. That includes the giant £6bn fund run by Neil Woodford, Woodford Equity Income, which was launched last year.
Mr Woodford’s previous funds, Invesco Perpetual Income and High Income, are excluded from the list as they are not in the equity income sector. Mr Brand explained that Sanlam had decided to restrict the list strictly to funds in the sector because they provide more stable returns, which is the aim of investors, he said.
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Top of the white list was the PFS Chelveton UK Equity Income fund. The study ranks funds on the basis of performance in discrete years. The Chelveton fund has achieved total returns of 10.7pc, 22.5pc, 39.8pc, -2pc and 25.6pc in the past five years.
An investment of £100 in the fund has produced £36.50 of income over that period and volatility has been 3.1pc.
Other notable movements in the list include the relegation of Fidelity Money Builder Dividend and Axa Framlington’s Monthly Income from the white list to the grey list.
Standard Life Investments UK Equity High Income Unconstrained, JOHCM UK Equity Income and RBS Equity Income have all climbed the rankings.
