Although the group noted performance in this category “improved substantially” over the last 12-months, The Scottish Widows UK Equity Income fund and HSBC Income Fund retained their spots as the worst and second to worst performing funds included in the study.
Despite the shakeup of the top income winners of the last five years, Sanlam CIO Phil Smeaton remarked that it was “encouraging to see that UK income funds have been only mildly affected” by political and economic uncertainty.
“The most obvious benefit to UK Income fund investors is on the income side: many UK dividend paying companies are multinationals with significant dollar denominated earnings and revenue. It is also important to note that equities do continue to have an important role to play in income generation, but as evidenced by the change in fund rankings, this has become a trickier and more volatile asset class to navigate than in the past.
“There are potential opportunities that investors can exploit, including reaping larger dividends from the translation effect and investing in stocks at a discount. However, it is also undeniable that the UK is entering an environment which has not been experienced before. The risk of uncertainty is high and there are many questions unanswered about the UK’s exit from the EU which could potentially have a positive or negative effect on the markets.”
