Equity IncomeJun 3 2020

The top performing UK income funds since Woodford

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The top performing UK income funds since Woodford

The tiny Octopus Multi-Cap Income fund is the best performing UK income fund over the past 12 months — the year since Neil Woodford was forced to suspend his flagship portfolio.

Octopus’ £15.2m fund has returned 5 per cent over the past year, compared with an IA UK Equity Income Sector average of -11 per cent.

Multi-cap funds dominated the top performers over the year to June 3, with the Gresham House UK Multi-Cap Income and Miton UK Multi-Cap Income funds also appearing in the five top performing funds.

Only the Octopus and Gresham House funds have seen a positive return over the past year, however, with every other fund slipping into the negative.

The coronavirus crisis has seen 17 per cent wiped from the UK’s blue chip index since the start of 2020 while the FTSE 250 has dropped nearly 20 per cent.

Top 10 UK income funds over year to June 3
FundReturn (%)Current yield (%)
Octopus UK Multi-Cap Income5.54.1
Gresham House UK Multi-Cap Income2.184.35
Montanaro UK Income-0.123.4
R&M UK Income-0.134.98
Miton UK Multi-Cap Income-0.144.82
Vitality UK Listed Equity Income-0.41-
Ninety One UK Equity Income-0.552.6
Charteris Premium Income-0.57-
AXA Framlington UK Equity Income-0.834.42
Threadneedle UK Equity Alpha Income-0.914.8

Mr Woodford’s now-defunct Equity Income fund is the absolute worst performer when compared with the IA UK Equity Income Sector and the income funds in the IA UK All Companies Sector, losing 38 per cent in the year.

Aberdeen Standard’s Income Focus fund has lost 30 per cent while Invesco’s three income strategies have lost between 24 and 26 per cent.

It was recently announced Mark Barnett, previously head of UK equities and Invesco, and manager of its income strategies, would leave the company "by mutual agreement".

His departure followed a prolonged period of underperformance during which his funds suffered redemptions and he lost investment trust mandates.

Mr Barnett had taken over the management of most of his funds from Mr Woodford back in 2014.

Bottom 5 UK income funds over year to June 3
FundReturn (%)Current yield (%)
Woodford Equity Income-38.165.21
ASI Income Focus-30.748.5
Invesco Income-26.855
Invesco High Income-26.185.09
Invesco UK Strategic Income-24.615.89

Investor cash that remains in what was formerly Mr Woodford’s equity income fund has lost 40 per cent since June 3 last year and more than 70 per cent has been returned to investors since it was announced the fund would be closed in October.

Read more: One year on — what has happened since the Woodford saga began?

Backers of Mr Woodford had already seen a prolonged stint of underperformance from Mr Woodford in the years leading up to the fund’s suspension. From June 2017 to June 2019, the fund lost 24 per cent compared with a UK All Companies average of a positive 1.2 per cent return.

Mr Woodford’s demise began in May last year when outflows were running at roughly £9m per working day. He had already been struggling to meet redemptions when Kent County Council asked to pull all the £260m it had invested with him through its pension fund.

Mr Woodford did not have enough liquidity to meet the request and his fund was suspended.