Co-managers on Kames’ UK Equity Income Fund Douglas Scott and Iain Wells have questioned the IA’s recent change to the yield requirements in the IA Equity Income sector, claiming the changes make it no different to any other UK Equity sector.
In March, investors raised concerns over the IA’s decision to lower the yield target for UK equity income funds from 110% to 100% of index yield over a three-year rolling period.
The change, which came into effect on 3 April, implied big funds could simply “ask for the rules to be changed”, Scott said.
“This move is good news for some in the IA Hokey Cokey UK Equity Income Fund sector. Some that were ‘out’ can now be ‘in’,” he added.
Scott’s co-manager Wells said the change would be confusing for investors and claimed the performance of the Kames income fund proved it was possible to offer strong performance and deliver income.
“A UK Equity Income fund should offer a premium yield relative to the market, otherwise is it not just a UK Equity Fund?” he asked.
“It makes no sense to lower the hurdle to being classed as an income fund, and means that such a fund now only needs to yield as much as the market, which is a confusing message to send the wider public.”
