The biannual Sanlam Income Study found eight funds had dropped out of its top-performing White List between the first and second half of last year, with three new entrants emerging.
Francis Brooke’s Troy Trojan Income fund, which had topped the White List at the last Income Study in June, fell 18 places to drop into the Grey List of funds considered not good enough for the White List but not performing badly enough to be in the Black List.
Sanlam suggested this fall from grace could be attributed in part to the value rally that emerged in 2016.
"Its performance has not been as strong as it was previously, most likely due to its quality style bias which has started to move out of favour, and the amount of income the fund has provided over the past five years is much lower than peers," the report said.
Sanlam noted that there had been "very little change" in its Black List, with Scottish Widows UK Equity Income remaining at the bottom despite substantially improved performance over 2016 and HSBC Income fund staying second from the bottom.
However a number of new funds entered the worst-performing category. The L&G UK Equity Income product appeared in the list, as did Liontrust's Macro Equity Income portfolio.
CF Canlife UK Equity Income also entered the Black List, along with Santander Equity Income.
Meanwhile the depreciation of sterling versus the US dollar in the wake of EU referendum result aided those equity income funds focused on the large-cap dividend stalwarts, such as BP and GlaxoSmithKline, with significant dollar-denominated earnings.
One name to benefit from this shift was the £1bn Schroder Income Maximiser fund, which rose from 34th to 7th position in Sanlam’s rankings.
"Performance has been very strong in 2016, with the fund ranking first out of our universe under this metric, and [the team] has maintained the fund's high yield, also ranking first out of peers under dividend income provided in the past five years," said the report.
The JOHCM UK Equity Income offering entered the White List after a "stellar year" in terms of performance, while incumbents Royal London UK Equity Income and Threadneedle UK Equity Alpha improved their positioning in the study.
A strong five-year performance meant the Miton UK Multi Cap Income fund, run by Gervais Williams and Martin Turner, topped the White List in spite of a "weaker" 2016 compared with its history.
Sanlam chief investment officer Phil Smeaton said: "The most obvious benefit to UK income fund investors is on the income side: many UK dividend-paying companies are multinationals with significant dollar-denominated earnings and revenue.
"It is also important to note that equities do continue to have an important role to play in income generation, but as evidenced by the change in fund rankings, this has become a trickier and more volatile asset class to navigate than in the past."
The quantitative study measures the absolute income generated by funds as well as capital growth and volatility over the past five years.
