An interesting fact from our income database is the extent to which the DFMs we cover favour very long-established funds run by industry stalwarts, despite the sectors in which they operate being replete with products from newer faces.
The most-owned UK equity strategy in income portfolios is Schroder Income Maximiser, which was launched in 2005, has been run by Scott Thomson since 2009 and is now £719mn in size. It appears in six of the portfolios we cover, having picked up a net one new buyer in 2023 and the same in 2022.
That puts it ahead of three funds each owned by five allocators, including Adrian Frost’s Artemis Income, which has had three sellers compared with one new buyer in 2023.
That fund, which Frost has been running for more than two decades, is £4.3bn in size and is second quartile over one and three years, while being top quartile over five years. Those heading for the exit may be doing so out of concern that the dividend, at 3.7 per cent, is not especially high in the current climate.
Gervais Williams is another long-standing manager continuing to bring in the bucks for Premier Miton, with his UK Multi-Cap Income fund picking up a new buyer in the most recent quarter to also be owned by five of the allocators we monitor.
Williams’s fund is bottom quartile over every time period, though it was the absolute top performer in the sector in the 2020 calendar year.
The key here may be the 5.1 per cent yield.
The final of the funds owned by five of the allocators we cover is Threadneedle UK Equity Income. This one bucks the trend a little in having a newcomer at helm, with Jeremy Smith taking over in November 2022. Since then, the fund has actually picked up two new buyers, with no sellers.
It is top quartile year to date and over one year, but yields less than 4 per cent, perhaps hinting at the ancient dilemma allocators face in the UK market, between generating a good income and a good capital return.
The average allocation to UK equity funds in the income portfolios we monitor is 15.6 per cent. The average exposure to global income funds is 6.3 per cent.
The most widely-owned global income fund among the allocators we cover is Fidelity Global Dividend, which appears in four of the portfolios we monitor, with one buyer and one seller in 2023.
Interestingly Lindsell Train Global Equity, which isn’t obviously an income product, is actually more popular among income portfolio constructors than many of the dedicated global income mandates out there.
The context around this may be that the Lindsell Train investment style focuses on large, liquid, dividend-paying stocks.
That fund has a yield of 2 per cent, which is just 66 basis points less than the Fidelity Global Dividend fund.
