X

Mortgage & Property

New Insurance Professional

Family Office Bulletin

Mortgage Property

Insurance Professional

Family Office

Sanlam UK’s latest Income Study reveals best and worst of UK Equity Income funds 

 

Sanlam UK has published its half-yearly Income Study, the definitive investor guide to the best and worst funds in the UK equity income sector.

The study, which has been running for more than 30 years, is a quantitative assessment that reviews and monitors the performance of 58 eligible funds in the Investment Association (IA) UK equity income sector over a six-month period. The study then categorises these funds into a White List, Grey List and Black List*.

In the January 2021 study:  

  • Topping the White List is the Santander Enhanced Income Fund which has moved up from the second place slot secured in July 2020, swapping places with the Liontrust Income Fund.
  • Laggards in the Black List include the Liontrust Macro Equity Fund, the Schroder Income Fund, Janus Henderson UK Equity Income and Growth, the ASI UK Income Unconstrained fund, HSBC Income and the L&G UK Equity Income fund.

 

The White List 

The Santander Enhanced Income Fund comes top of the White List in this first 2021 study, having moved up from second in July 2020 due to its managers delivering alpha against peers in 2020 following a good return profile in 2019.

The Liontrust Income Fund, run by Robin Geffen, has fallen to second place in this study but continues to deliver decent performance returns, including during recent volatility. It is consistently first and second quartile across volatility, income and performance criteria.

Continuing its climb up the rankings is the ASI UK Equity Income Fund, which finishes in third position after jumping 13 places in this study due to top decile performance and low volatility. It previously rose 16 places in the July 2020 study.

The funds which have retained White List status include the ES R&M UK Equity Income Fund, the Artemis Income Fund, the Franklin UK Equity Income Fund, the NFU Mutual UK Equity Income Fund, the Aviva UK listed Equity Income, the Blackrock UK Equity Income, the Santander Equity Income and the Troy Trojan Income Fund. 

The Threadneedle UK Equity Income Fund, Lazard Multi-Cap UK Income Fund, and the Allianz UK Equity Income Fund have all re-entered the White List after falling into the Grey List in the last study.

The Grey List 

The Fidelity Enhanced Income, the Fidelity Money Builder Dividend, the Man GLG UK Income and the Premier Miton UK Multi Cap Income have all fallen from the White List and into the Grey List in this study.

Three funds made an astounding recovery and moved up to the Grey List after a prolonged period in the Black List. The JOHCM UK Equity Income Fund, the VT Downing Monthly Income Fund and the Merian UK Equity Income Fund have struggled in the rankings for several studies, however in this review they have improved respectively by 15, 20 and 12 places due to good performance and income paid.

The Janus Henderson UK Responsible Income, the Axa Framlington UK Monthly Income Fund, the Threadneedle UK Monthly Income Fund moved upwards respectively by three, seven, and one places.

At the bottom of the Grey List are Chelverton UK Income Fund and the Unicorn UK Income Fund. Both funds suffered from the high standard deviation over the period analysed and disappointing returns in a market that has been exceptionally volatile.

The Black List 

The Black List has remained relatively consistent. However, there are two anomalies that stand out.

The Slater Income Fund has not improved its position in this study due to its poor performance and fourth quartile volatility versus peers. Over the last few studies, the fund has dropped slowly from the White List into the Grey List and is now in the Black List for the second study in a row.

The second anomaly is the Marlborough UK Multi Cap Income fund. The fund has fallen 10 places – the third study in a row in which it has dropped position. This was mainly driven by poor selection in small and mid-cap equities detracting from performance and increasing volatility. A similar path can also be observed with Canlife UK Equity Income which dropped 15 places.

Both the Premier Miton Income Fund and Premier Miton Optimum Income Fund have remained at the bottom of the list in the most recent study. These two funds have had a disappointing two and half years, having fallen out of the White List mid-2018 and continued to fall down the rankings. 

Laggards that continue find themselves in the Black List since the previous study include the Liontrust Macro Equity Income Fund, the Schroder Income Fund, the M&G Dividend Fund, the UBS Equity Income Fund, the HSBC Income Fund, the ASI UK High Income Fund, the L&G UK Equity Income, the Janus Henderson UK Equity Income and Growth and the ASI UK Income Unconstrained.

Phillip Smeaton, Chief Investment Officer, Sanlam Private Wealth (pictured), said: “The so-called ‘hunt for yield’ was already proving difficult for investors prior to 2020, but these troubles have been dramatically amplified in the wake of the global Covid-19 outbreak. Reduced revenues and profits as a result of the pandemic led to a significant number of dividend cuts by UK and European companies, while government lockdowns severely impacted businesses in leisure, tourism, air travel, retail, and construction. For equity income investors, this has meant some funds have offered substantially reduced yields to investors during 2020 as underlying company holdings focused on rebuilding payments from 2021 onwards.   

“However, the pandemic marked out a highly unusual year and in efforts to avoid perpetuating a short-term approach to investment the Sanlam Income Study judges funds over a five-year period. We have three new entrants to our prestigious White List in this first 2021 study, and interesting moves across the rest of the list driven by the high volatility we have experienced in the UK in recent years.”  

This Week’s Most Read

  • Sir Keir Starmer in pub brawl?

    Predictions of scuffles in pubs came true today, with a landlord being ejected from his own pub by interlopers. Sir Keir Starmer had been listening

  • Class of 2021 retirees at risk of running pension pots dry

    Two thirds (66%) of 2021 retirees risk not having the pension savings to sustain their planned retirement income, according to a new report launched today

  • Sir Keir Starmer, pubs and COVID – taking the piss, not taking a piss..

    We thought you weren’t allowed into pubs these days? Incredible scenes erupted today outside the Raven Pub in Bath, as Sir Keir Starmer was confronted

  • New financial advice service from Vanguard aimed at retirement savers

    Designed for investors saving for retirement, Vanguard Personal Financial Planning launches on the award-winning Vanguard UK Personal Investor platform – vanguardinvestor.co.uk/financial-advice. The service offers personalised

  • The Coming Decade for Climate Solutions

    Randeep Somel, Fund Manager, M&G Climate Solutions Fund, is finding reasons to be cheerful as he uncovers some of the powerful drivers of change which

  • Deepbridge achieves record EIS fundraising levels

      Record £29 million deployed across 37 growth companies Deepbridge attributes success to intermediary relationships and sector focus Venture capital investment manager Deepbridge Capital today

  • A Positive Charge

    Ben Constable-Maxwell, Head of Impact Investing at M&G Investments, is one of the driving forces behind the move to integrate ESG, sustainability and impact investing

  • Advice firm highlights how growing reputation boosts referrals amid pandemic

    National financial advice firm, Tenet&You, which opened its new offices at Haddington in December last year, has reported an increase in new business since the

  • The Superbia Group commits to accountability and living its core values with the formation of a new independent ESG Advisory Board

    The Superbia Group has today signalled its intent to live its values by announcing the appointment of a new independent ESG Advisory Board. The new

  • A SPAC-tacular surge

    Written by Christopher Butcher, Momentum Global Investment Management During a period of extreme volatility and a global pandemic, the initial public offering (IPO) market had

IFA Magazine

Keep updated on the most important financial events 

Make sure you are an informed

wealth professional..

Adblock Blocker

We have detected that you are using

adblocking plugin in your browser. 

IFA Magazine