InvestmentsFeb 10 2014

Fund Review: JOHCM UK Equity income

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Mr Beagles attributes the strong performance of the fund to success in using ‘bottom-up’ company fundamental factors in stockpicking work. In the five years to January 30, the fund returned 164.42 per cent compared with an IMA UK Equity income sector average performance of 101.51 per cent and a FTSE All-Share total return index return of 101.67 per cent, according to data from FE Analytics.

The big winners for the fund over the past 12-18 months included ITV, 3i and TUI Travel, which owns Thompson and First Choice. A consistently overweight position in mid and small capitalised stocks has been rewarding, particularly in the past couple of years as many are domestically orientated, adds Mr Beagles. In the past six months, the fund’s exposure to larger capitalised stocks has increased, although it remains underweight there. The fund’s few challenging stocks have included RSA, which has disappointed.

Looking ahead, Mr Beagles expects 2014 to be a more challenging environment, with worries about monetary stimulus being withdrawn. He expects market returns to be less strong, although earnings will come through, particularly in developed world stocks relative to expectations.

This fund’s strong performance track record combined with a clear investment process and significant assets under management make it a compelling choice for investors looking for an alternative in the UK Equity Income sector.


Geoff Mills, managing director, Rayner Spencer Mills:


“It is important that in a range of funds delivering income, the source of income is well diversified. The team at JOHCM treat yield discipline as a significant part of the stock selection process. This has the effect of making the fund one of the more contrarian in the range of funds we believe are strong investments. This also forces a strong sales discipline, with a yield above the FTSE All-Share an important part of the evaluation. The team at JOHCM are small but input is not restricted to the two portfolio managers as they encourage wider team debate. Given the income focus of the fund we feel this fund can be used as a core selection for an investor’s portfolio.”