The firm’s income study that has been running for more than thirty years, aims to provide a quantitative assessment of UK equity income funds, that rates them on: Absolute income generated over the past five calendar years; capital growth for each of the past five 12-month periods and volatility over the past five years.
On these criteria, the PFS Chelverton UK Equity Income Fund tops the mid-year version of the Sanlam Income Study, with the Simon Moon and Fraser Mackensie-run Unicorn UK Income Fund taking second place. Both funds have a bias toward small- and mid-caps, which saw them push Martin Cholwill’s fund Royal London UK Equity Income Fund, which focuses on cashflow across the cap scale from first to third place.
Columbia Threadneedle took the prize for most funds represented in the list with three of its offerings making the grade. Charles Brand, head of portfolio management at Sanlam Wealth said: “This shows the consistency being delivered by the firm across a range of products amongst their UK portfolio managers.”
The JOHCM UK Equity Income Fund regained its place in the White List during the period after its performance was knocked by its exposure to energy stocks that were hit by the plunging price of oil.
But, Brand said: “with the stabilisation of the commodity, the headwinds for this strategy have been largely removed.”
The RBS Equity Income Fund, also managed to make it into the list, moving from near the top of the Grey List to the bottom of the Whtie.
Black and Grey
On the other side of the coin, most of the denizens of the Black List of underperformers, remained the same as at the start of the year, with three notable exceptions. The Newton UK Income Fund and the Jupiter Income Trust fell into the Black List during the period, in both cases, Brand said, on the back of poor performance over the past twelve months. Over the same period, The Standard Life Investments UK Equity High Income Fund, moved in the opposite direction, from the Black List into the Grey, on the back of outperformance.
The other notable performance within the Black List was the Kames UK Equity Income Fund. According to Brand: the fund “has made positive progress and moved up through the Black List although the fund’s performance was not quite sufficient to see it escape into the Grey List.”
“It is, however, one of the few funds in the study with a historical twelve-month yield above 4.5%,” he added.
Three funds fell from the White List into the Grey List, most noticeable the Evenlode Income Fund, which entered the study for the first time as a member of the White List in January.
Six months on, the fund, managed by Hugh Yarrow and Ben Peters, has fallen to the top of the Grey List, despite Brand said, having delivered on its mandate since inception, and having an overall historical twelve-month yield level that is higher than the majority of the White List constituents.
The Fidelity Money Builder Dividend Fund and the AXA Framlington Monthly Income Fund have also fallen from White to Grey during the period.
