The most con­sis­tent eq­uity in­come funds

A long-run­ning sur­vey high­lights the best op­tions for in­come seek­ers. Laura Suter names this year’s top per­form­ers

The Daily Telegraph - Your Money - - YOUR MONEY -

In­come in­vestors do not need to sac­ri­fice growth for reg­u­lar yield, a new study shows. One lead­ing in­come fund has paid out 33.5pc in in­come over the past five years and has de­liv­ered a to­tal re­turn of 91pc over that pe­riod. The Mi­ton UK Multi-Cap In­come fund has handed savers £33.50 of in­come per £100 in­vested over the past five years. On the ba­sis of rein­vest­ing the in­come, the fund has achieved a to­tal re­turn of 90.8pc. Its cur­rent yield is 4.5pc.


The fig­ures, com­piled by San­lam, a wealth man­ager, high­light the most con­sis­tent UK in­come funds over the past six months. The list, which is up­dated ev­ery six months and has been run­ning for 20 years, iden­ti­fies the funds that have de­liv­ered con­sis­tent in­come as well as cap­i­tal growth.

Funds are ranked ac­cord­ing to the in­come paid out, how sta­ble re­turns are and re­cent per­for­mance, all over a five-year pe­riod.

The fund to have de­liv­ered the largest in­come over the five years is Schroder In­come Max­imiser. The fund, which has £1bn in as­sets, aims to de­liver 7pc in­come each year.

Over the past five years it has re­turned £43.50 of in­come on £100 in­vested. The to­tal re­turn, of cap­i­tal growth and rein­vested in­come, was 65.4pc over the pe­riod.

This fund gen­er­ates some in­come from the div­i­dends it re­ceives but also uses com­pli­cated fi­nan­cial in­stru­ments to gen­er­ate in­come. Th­ese “derivatives” make money by sell­ing some of the po­ten­tial fu­ture growth of the fund’s hold­ings.

This means that, when mar­kets rise, the fund will typ­i­cally not grow as much as its peers. How­ever, when mar­kets fall, the fund should not lose as much as ri­vals.

Some UK in­come funds have ben­e­fited from the fall in ster­ling since Bri­tain voted to leave the EU, which has boosted the earn­ings, and div­i­dends, of com­pa­nies that earn in dol­lars.

There have been sig­nif­i­cant changes in the con­stituents of San­lam’s ta­bles in the past six months. This, the firm said, high­lights the un­cer­tainty fac­ing UK mar­kets and that not all funds have made the right calls.

One ex­am­ple is the Troy Tro­jan In­come fund. The fund was the best per­former in San­lam’s list six months ago, but has now fallen out of the top rank­ing al­to­gether.

The fund has de­liv­ered £24.50 of in­come on a £100 in­vest­ment over the past five years and has re­turned 58.1pc in to­tal. This is not dra­mat­i­cally dif­fer­ent from the Franklin UK Eq­uity In­come fund, which did make it onto the list, but the Troy fund has been down­graded be­cause of poorer per­for­mance in 2016 and its cur­rent yield of 3.9pc.

Data from FundEx­pert, an in­vest­ment shop, high­lights the split in the mar­ket. Its re­search found that 54pc of UK in­come funds de­liv­ered their largest payout last year, but that 25pc of funds cut pay­outs in 2016 – the high­est rate since 2012.

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