Income study ranks UK equity income funds from best to worst

by Tom Bailey from Money Observer |

Sanlam’s Income Study, which has been running for over 30 years, places open-ended income funds.

Aviva Investors UK Listed Equity Income fund has topped the “White List” in Sanlam’s half-yearly Income Study, which highlights the most and least reliable UK equity income fund performers.

Sanlam’s Income Study, which has been running for over 30 years, places income generating open-ended funds into one of three categories: the White List, Grey List, and Black List. In total, the performance of 62 funds was examined.  

Top of the list was Aviva Investors UK Listed Equity Income fund, previously named the Aviva Investors UK Equity Income fund, has been placed at the top of the January 2020 study, up from its previous fifth place position in July 2018.

The study ranks funds according to several factors, such as absolute income generated by the fund over the past five calendar years, capital growth for each of the past five 12-month periods and volatility over the past five years. Moreover, the most recent period of performance, how the fund has fared over the past year, receives a greater weighting.

In second place was Santander Enhanced Income, up from being fourth place in July 2019’s study. While the fund saw performance slip in 2016, Sanlam notes that in 2019 the fund returned 26%, making it one of the best performing funds in the Investment Association universe.

Man GLG UK Income Professional has fallen from second to third place. A regular on the list, the fund’s small slip was the result of distributing slightly less income than Santander Enhanced Income.  

In July 2019, both LF Miton UK Multi Cap Income and Santander Equity Income made an appearance in the top five. Both have since fallen out of the top five. Santander Equity Income has fallen by five places to ninth place, while LF Miton UK Multi Cap Income has fallen from third place to twentieth, placing it on the grey list.

In the previous study, Neptune Global Income had topped the White List. Since then, the Neptune fund company has been purchased by Liontrust Asset Management, meaning Neptune Income has been renamed Liontrust Income fund. The fund is still managed by veteran fund manager Robin Geffen. Since then, the fund has slipped down the rankings, sitting in 19th place and part of the Grey List, owing to sluggish short-term performance over the past six months.  

When it came to the worst performers, Liontrust Macro Equity Income entered the Black List, falling 21 places. Sanlam notes that the fund suffered particularly bad volatility in the fourth quarter of last year.

Schroder Income and M&G Dividend also entered the Black List, ranking at 58 and 59, respectively.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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