Equity IncomeAug 2 2017

Henderson's equity income fund returns to IA sector

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Henderson's equity income fund returns to IA sector
ByTaha Lokhandwala

Henderson has returned its UK Equity Income & Growth fund to the IA's Equity Income sector following rule changes made by the trade body.

The £433m fund, managed by James Henderson and Laura Foll, was removed from the Equity Income sector in September 2013 after failing to meet a requirement to yield 10 per cent more than the FTSE All-Share over three years.

It returned to the sector on August 1, the IA having eased its requirements this May following a year-long consultation. Funds in the sector now have to merely yield more than the index, and more than 90 per cent over one year.

Ms Foll said the Henderson team were pleased with the decision to change the rules, which means managers who focus on growth as well as income are not penalised.

"The decision earlier this year by the IA to lower the hurdle to 100 per cent of the FTSE All-Share yield means we have qualified to enter the sector again," she said.

“Investors should not expect this decision to alter the investment process or style of the fund. [We] will continue to invest for income across the market cap spectrum, from smaller companies listed on the Aim through to larger companies within the FTSE 100."

The fund, which currently yields 3.6 per cent, has returned 90 per cent over the past five years compared with a 70 per cent average for the IA UK Equity Income sector. However, over three years the fund has underperformed its peer average.

Janus Henderson joins Rathbones in returning to the UK Equity Income sector after the changes were announced. Almost 20 funds were originally removed for failing either one or three-year yield requirements, including Mark Barnett's Income and High Income strategies.