UK Equity Income funds from Aberdeen Standard Investments, Premier Miton, Schroders, L&G and Liontrust are among those “blacklisted” for consistent underperformance in a new report.
Sanlam UK’s latest income study, which has been running for more than 30 years, ranked the ASI UK Income Unconstrained fund as the very worst portfolio in the IA UK Equity Income sector.
Thomas Moore, the fund’s manager, said macro-dominated markets had created challenges for the portfolio’s bottom-up, non-consensus approach but that ASI remained “highly confident” in the fund’s ability to generate outperformance.
Others on the “black list” included the Marlborough UK Multicap Income fund, which has dropped against peers in three consecutive studies, and the Canlife UK Equity Income fund, which followed a similar trajectory.
A spokesperson for Marlborough said: “[The fund] has a very strong long-term performance record.
“While we experienced an unprecedented investment environment in 2020, the investment team remains confident about their process for the long term.”
Both Premier Miton’s Income and Optimum Income fund also appeared on the list, having fallen from their positions within the top performers in 2018.
The Schroder Income fund, Liontrust’s Macro Equity Income fund, the M&G Dividend fund and the L&G UK Equity Income fund were among the “laggards”, the report said, as they consistently ranked in the “black list”.
Liontrust recently announced it is to merge the Macro Equity fund with the Liontrust Income fund, and has shaken up the managers in the income team.
Sanlam ranks funds in the sector with more than £20m assets using seven different criteria based on performance, volatility and the income distributed, with the most recent period of performance receiving a greater weighting.
| The "black list" | |
| Rank | Fund |
| 45 | Slater Income |
| 46 | Premier Miton Optimum Income |
| 47 | Premier Miton Income |
| 48 | Liontrust Macro Equity Income |
| 49 | Marlborough Multi-Cap Income |
| 50 | Canlife UK Equity Income |
| 51 | Schroder Income |
| 52 | M&G Dividend |
| 53 | UBS UK Equity Income |
| 54 | ASI UK High Income Equity |
| 55 | Janus Henderson UK Equity Income |
| 56 | L&G UK Equity Income |
| 57 | HSBC Income Retail Income |
| 58 | ASI UK Income Unconstrained Equity |
| Source: Sanlam | |
Iain Pyle, manager of the ASI UK High Income fund, said: “The fund targets a higher yield than the average equity income fund, looking to deliver a 10 per cent yield premium to the benchmark through the cycle.
“In doing so it naturally had exposure to some higher yielding, but higher risk, parts of the market in the early part of 2020.”
A Schroders spokesperson said the Schroder Income fund was one of the few “genuine” value funds in the equity income space, which had led performance to lag both peers and the wider market.
The spokesperson added: “However, the fund retains a highly regarded process which specialises in out of favour companies with long-term potential. We continue to provide an important role in our client’s portfolios.”
The same was true for UBS’s UK Equity Income fund, according to its spokesperson, who said the portfolio followed a “clear and distinctive value approach” which had suffered in a period of underperformance for the strategy.
At the other end of the spectrum, Santander’s Enhanced Income fund knocked Robin Geffen’s Liontrust Income fund off the top spot.
| The "white list" | |
| Rank | Fund |
| 1 | Santander Enhance Income |
| 2 | Liontrust Income |
| 3 | ASI UK Income Equity |
| 4 | Artemis Income |
| 5 | Franklin UK Equity Income |
| 6 | R&M UK Equity Income |
| 7 | Aviva Investors UK Listed Equity Income |
| 8 | Santander Equity Income |
| 9 | Allianz UK Equity Income |
| 10 | NFU Mutual UK Equity Income |
| 11 | Threadneedle UK Equity Income |
| 12 | BlackRock UK Income |
| 13 | Lazard Multicap UK Income |
| 14 | Trojan Income |
| Source: Sanlam | |
The ASI UK Equity Income fund has climbed up the list to finish in third position, jumping 13 places from July’s report, while Allianz UK Equity Income, Threadneedle’s version of the fund, and the Lazard Multi-Cap UK Income fund also joined the “white list” this time round.
Funds which have retained their top tier status include the Artemis Income fund, the Franklin UK Equity Income fund, Aviva’s UK-Listed Equity Income fund and the Troy Trojan Income fund.
All firms which appeared in the “black list” were approached for comment.
imogen.tew@ft.com
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