UK Equity Income analysis: Success beyond Woodford

Neil Woodford’s departure from Invesco Perpetual will certainly raise a few eyebrows. He has long been known as one of the major players in UK equity income, avoiding the technology crash and getting out of the banks before the financial crisis.

However, he is not the only success story in the sector, despite his enviable track record. Over the past year, funds have returned an average of 21.9 per cent and not a single one lost money on an initial £1,000 investment.

There is a wide span of returns, however. The table below shows returns with income reinvested but, as pointed out in MM’s latest analysis of UK equity income funds, results will vary depending on whether income is taken or left within the fund to compound.

Article continues after advert

The top performer over 12 months is the Unicorn UK Income fund, returning a hugely impressive £1,439 on an initial £1,000. It has also done exceptionally well over five years, returning £3,111. The £361.4m fund has a 44.9 per cent allocation to industrials.

At the other end of the scale, the lowest-returning fund over 12 months – the Elite Charteris Premium Income fund – still managed to return £1,043.

Following Mr Woodford’s departure, Chelsea Financial Services pointed out that no single fund would be able to cope with the potentially huge inflows from investors looking to leave the fund. However, it suggested three possible alternatives: Artemis Income, Rathbone Income and Threadneedle UK Equity Alpha Income.

Top And Bottom Performing Funds In The UK Equity Income Sector Based On An Initial £1,000 Investment
Top 5
Unicorn UK Income B Inc£1,439
PFS Chelverton UK Eq Income Ret£1,420
Standard Life UK Eq Inc Uncons R Acc£1,377
CF Miton UK Multi Cap Inc Ret A Acc£1,361
Marlborough Multi Cap Income A Inc£1,352
Bottom 5
Elite Charteris Premium Income Inc£1,043
BlackRock UK Income A Inc£1,098
Neptune Income A Acc£1,117
Fidelity Enhanced Income Acc£1,121
Ignis UK Enhanced Income A Acc£1,124
Sector average£1,219
Data one year to 15 October 2013. Source and copyright: Money Management