Searching for income from Ecclesiastical

Searching for income from Ecclesiastical

Diversification and a focus on long-term, high-quality companies has helped investors seeking income from the Ecclesiastical Higher Income fund.

According to manager Robin Hepworth, who is also chief investment officer of Ecclesiastical, many of the companies in the fund have been held continuously since the fund was launched in 1994.

These include blue chips such as GlaxoSmithKline and Shell, which are the top two weightings in the 117-strong portfolio, at 2.22 per cent and 1.92 per cent respectively.

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Even the recent troubles at Tesco have not shaken the manager’s belief in the long-term prospects for dividend growth at that company, which is one of the portfolio’s top five companies, at 1.63 per cent.

The £303.2m fund does have some exposure to fixed interest, to reduce volatility, but the balanced managed fund looks for investments with a healthy yield, which the team believes will serve investors well over the long term.

Overall, the fund has 68 per cent in equities, 27.7 per cent in bonds, and a small cash holding of just 3.72 per cent.

According to data from FE, the historic yield on the fund is 4.21 per cent, with dividend payouts in April and August.

The ongoing charge as at 12 December 2014 was 1.33 per cent.

An analyst note from investment research firm Rayner Spencer Mills, said: “There is no deliberate benchmark tracking with the manager aiming to produce a strong repeatable dividend from a well diversified portfolio.

“We believe the managers have shown over a long history that they know how to operate this process in a variety of economic conditions whilst looking to preserve capital.”

Adviser view

Laith Khalaf, senior analyst for Bristol-based Hargreaves Lansdown, said: “This is a little-known fund, with a long and illustrious track record. It is a good stock-picker fund with a healthy yield, and reasonably sized.”

He added that according to some calculations, since 1994 the fund has turned a £10,000 investment into £63,500, compared with £34,600 produced by the average fund in the IA Mixed Investment sector.