The White List, which forms the top third of the group’s half-yearly Income study, represents those equity income funds it believes have demonstrated the ability to produce superior returns over at least five years.
According to Charles Brand, head of portfolio management at SPI, Cholwill read both the economy and the market well and performance was helped by exposure to medium-sized companies in economically sensitive areas.
The front runner in the last iteration of the list, the Unicorn UK Income Fund (managed now by Fraser Mackersie and Simon Moon after the passing of John McClure), slipped six places.
But, according to Brand, this had more to do with the underperformance of the small-cap sector, in which the fund invests, rather than the change in manager.
“Fraser and Simon continue to manage the fund with the same strong disciplined approach that John McClure instilled in them, giving comfort in future returns,” he said.
This view is backed up by significant fall over the same period of the PFS Chelverton UK Equity Income Fund, managed by David Horner and David Taylor. This fund also focuses on the small-cap income sector. But, despite the fact that small-cap focused funds underperformed their larger-cap focused peers, Brand points out that such funds still have their attractions.
“Of the funds on the White List, Chelverton and Unicorn have delivered the highest yield over the last year,” Brand added.
Moving in the opposite direction was Carl Stick’s Rathbone Income Fund, however, which Brand said: “benefited both from its 50% exposure to non-FTSE100 companies, and, in a volatile year for equities, Carl’s disciplined focus on ‘what can go wrong’ with each investment, has brought distinct benefits.”
New entrants into the list are the Evenlode Income Fund, managed by Hugh Yarrow and Ben Peters, which has just achieved a five-year track record and the Axa Framlington Monthly Income Fund, which is managed by George Luckraft and has more than half its funds invested outside of the FTSE 100.
The most notable exit from the list, according to Brand is the departure of the JOHCM UK Equity Income Fund, which fell into the Grey List.
“Despite their accurate forecast of weaker returns for the market through 2014, Clive Beagles and James Lowen failed to turn this into successful investments. Large exposure to the energy and natural resource sectors seems to have been the main issue for the team, with much of the pain being felt in the latter half of the year.
