Sanlam UK’s latest Income Study, published today (February 11), put the £1bn Aviva UK Listed Equity Income fund at the top of its list for the five years to December 31, 2019.
The fund sits just ahead of Santander’s tiny £53m Enhanced Income fund and the £1.4bn Man GLG UK Income fund, according to the report.
Sanlam ranks the funds based on performance over the past five years (with the most recent year receiving a greater weighting), the level of volatility and the income distributed from the fund in a bid to review and assess the 62 eligible funds in the sector. Funds with less than £20m assets are excluded.
The study looked at the IA UK Equity Income sector, which the failed Woodford Equity Income fund was not a part of.
The top 14 performing funds are placed into a white list, those in the middle are named grey funds while those struggling in terms of Sanlam’s criteria are 'blacklisted'. The rankings are recalculated every six months.
| Sanlam's White List | |
| Ranking based on overall merit | Fund |
| 1 | Aviva Investors UK Listed Equity Income |
| 2 | Santander Enhanced Income |
| 3 | Man GLG UK Income |
| 4 | NFU Mutual UK Equity Income |
| 5 | Allianz UK Equity Income |
| 6 | Royal London UK Equity Income |
| 7 | Franklin UK Equity Income |
| 8 | Premier Monthly Income |
| 9 | Lazard Multicap UK Income |
| 10 | Premier Income |
| 11 | Trojan Income |
| 12 | MI Chelverton UK Equity Income |
| 13 | Artemis Income |
According to the report Premier Asset Management has performed more strongly than in recent studies, with both the Premier Monthly Income fund and Premier Income fund appearing on the white list.
Another notable success was the Allianz UK Equity Income fund, which jumped 30 places and into the top spots this year.
According to Sanlam, the black list contained mostly the usual suspects, with little change to the list of the worst performing portfolios.
New entrants to the list included the Liontrust Macro Equity Income fund, however, which fell 21 places compared with the previous report and dropped from Sanlam’s grey list to the black list.
Meanwhile the Schroder Income fund and the M&G Dividend fund also fell by more than 15 places each and into the blacklist.
| Sanlam's Black List | |
| Ranking based on overall merit | Fund |
| 49 | Liontrust Macro Equity Income |
| 50 | Merian UK Equity Income |
| 51 | L&G UK Equity Income |
| 52 | Jupiter Income Trust |
| 53 | MI Downing Monthly Income |
| 54 | Santander Investment Income |
| 55 | Scottish Widows UK Equity Income |
| 56 | HSBC Income Retail Income |
| 57 | ASI UK High Income Equity Retail Income |
| 58 | Schroder Income |
| 59 | M&G Dividend |
| 60 | Janus Henderson UK Equity Income |
| 61 | ASI UK Income Unconstrained |
| 62 | UBS UK Equity Income |
A Janus Henderson Investors spokesman said they were disappointed to be included in the report, adding recent performance had been driven by its strategy of investing in smaller companies.
Such stocks had been overshadowed by domestic concerns including Brexit until recently, but that sentiment had begun to change and the fund had outperformed its benchmark in recent months, the spokesman said.
Similarly James Lynch, manager of the MI Downing Monthly Income fund, said the portfolio was intended to provide a diversified source of income by focusing on companies at the small end of the market.
He added: “Over long investment horizons smaller companies have consistently outperformed the wider market and we would expect them to do so into the future. The MI Downing Monthly Income Fund gives access to this opportunity whilst providing a premium yield.”
M&G pointed out it had changed the manager on its Dividend fund last year, while a Merian spokesperson said the performance of its UK Equity Income fund pre-2017, when it also had a change of manager, had dragged the fund down.
A spokesperson from HSBC said: “We retain confidence in our analysis that the fund will deliver returns in the long term.”
Liontrust, LGIM, Jupiter, Santander, Scottish Widows, Aberdeen Standard, Schroders and UBS have been approached for comment.
imogen.tew@ft.com
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