Investments  

Tiny fund tops UK income performance charts

Tiny fund tops UK income performance charts

A £99m fund run by Blackrock is the top performing UK equity income fund in the 2019 year to date. 

The Blackrock Institutional Equity UK Focus fund has returned 20 per cent this year to date, compared with 11 per cent for the average fund in the IA UK Equity Income sector over the same time period, according to data from FE Analytics. 

The strategy is not part of the official Investment Association UK Equity Income grouping, but is categorised by FE as a UK income fund and has a stated yield of 2.7 per cent.

Since its launch in October 2018 the fund, which is managed on a team basis, has returned 28 per cent, compared with 15 per cent for the average fund in the IA UK Equity Income sector.

The largest investments in the fund are Relx, a media company, the shares of which have risen from £16.78 to £18.72 over the past year, and Compass, an outsourcer.

Compass shares have risen in value from £16.43 to £20.17 over the past year. 

The best performing fund in the IA sector this year to date was the £173m Henderson Responsible Income fund, which is managed by Andrew Jones and has returned 17 per cent.

The largest investments in the fund are Glaxosmithkline and Astra Zeneca. 

The best performing UK fund overall this year is the £7.1bn Lindsell Train UK Equity fund, which was the top performer in the IA UK All Companies sector in the first half, returning 24 per cent this year to date, compared with an average of 14 per cent. 

The fund has returned 97 per cent over the past three years, compared with 33 per cent for the sector average.

The largest investments in the fund also include Relx, as well as drinks company Diageo. 

Fund manager Nick Train has acknowledged that the concentrated nature of the fund is a risk, and said he has been unable to buy more shares in some of his best performing investments due to the restrictions placed on open-ended funds holding more than 10 per cent of their capital in any one security.

The second best performer in the IA UK all Companies sector in that time period was the £448m Baiilie Gifford UK Alpha fund, which returned 22 per cent.

The largest investments in the fund include Rightmove and Homeserve.

Baillie Gifford funds typically deploy the growth style of investing, similar to the style used by Lindsell Train. This style tends to perform well when bond yields are low.  

Paul Stocks, investment director at Dobson and Hodge in Doncaster, said: "We have owned the Lindsell Train UK fund for years.

"The manager takes some very punchy positions in companies and has said for a while that we can't always expect the level of performance we have had. He is one of the few managers who would say that.

"The fund has performed well in recent years and [this] is all you could ask for really."