Columbia Threadneedle Investments’ funds were among the biggest downgraded movers in Sanlam’s mid-year income study.
The Threadneedle UK Equity Alpha fund, run by Richard Colwell (pictured), faced the largest negative movement having fallen 43 places after performance has been consistently weak on all but one period reviewed.
In addition, the Threadneedle UK Equity Income fund tumbled 23 places into the black list and the Threadneedle UK Monthly Income fund dropped six places but remains in the grey list.
The Sanlam report said performance was the main factor determining its poor positioning.
AJ Bell head of active portfolios Ryan Hughes said: “For me, it shows that a focus on the core Threadneedle Equity Income fund is key as it’s a solid long-term core equity income fund.
“Monthly Income and Alpha are both a little niche and it demonstrates that in many cases, the standard fund will be suitable for most people.”
Rise and fall
Several other income funds also dropped down the rankings.
The Troy Trojan Income fund, previously first place in the white list, dropped 11 places to number 12. Sanlam said this fund has moved up and down the list many times and while performance over the past year has been strong, total income distributed to investors has disappointed over the longer term.
Additionally, the Axa Framlington Monthly Income fund, run by George Luckraft, also dropped seven places from its previous ranking as the second placed fund in the white list.
Several funds fell from the white list to the grey list, including the Franklin UK Equity Income fund, Artemis Income, FP Miton Income, Fidelity Enhanced Income and Fidelity MoneyBuilder Dividend.
Kevin Murphy and Nick Kirrage’s Schroder Income fund also dropped a further 10 positions in the grey list having fallen 24 places in January’s study.
While the severity of the falls varied between 13 and 22 places, Sanlam said each of the falls is attributable to recent performance during the particularly volatile period that started in the fourth quarter of 2018.
Hughes said: “Investing in UK equities has proved to be challenging for all market participants since the Brexit referendum and this has continued through 2019.
“With a huge polarisation in the market between domestic stocks and overseas earners, the positioning of a fund is certainly having a significant impact on relative performance and volatility.”
Top performers
But the Equity Income sector wasn’t as bad for all funds.
Coming in top place of the white list was the Neptune Income Fund, run by Neptune chief executive Robin Geffen, which moved up 25 places.
The Man GLG UK Income fund came in second place, up from seventh place in the last survey, followed by Miton UK Multi Cap Income in third place which retained its long run in the top three funds.
In fourth place, the Santander Equity Income fund rose five places, having appeared in the black list in 2017. Its sister fund, the Santander Enhanced Income Fund, a version of the Equity Income fund that places a greater emphasis on yield, retained its white list presence, moving up three places.
New entrants to the white list include Schroder Income Maximiser and the BMO Responsible UK Income fund, 10th and fourth place respectively, as the two funds have finally broken into the top tier after hovering at the top of the grey list in the previous study.
Sanlam UK chief investment officer Philip Smeaton said: “Managers of funds appearing in the Sanlam UK income study’s white list have overcome some severe fluctuations in market levels and provided long-term rewards.
“By selecting funds from the white list, investors are able to enjoy a high level of dividend income as well as the satisfaction of investing in funds that have demonstrated superiority over the past five years in our six-monthly analysis.”
Sanlam black list
The black list proved show more consistency than the other sections of the study, according to Sanlam.
The majority of the funds in the list remained familiar names, including the Unicorn UK Income fund, the HSBC Income fund and the Aberdeen UK Equity Income fund. The poorest overall performance was UBS UK Equity Income, L&G Equity Income and Janus Henderson UK Equity Income and Growth, which are placed right at the bottom.
The two Standard Life funds, SLI UK Equity Income Unconstrained and SLI UK Equity High Income, now appear in the black list after they were both placed near the bottom of the grey list in January.
Hughes added: “The likes of L&G, UBS and Janus Henderson have been more consistent underperformers but as ever, it shows the importance of doing detailed analysis to assess the investment approach of each manager to determine whether the performance delivered has been within or outside your expectations.”
