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Eight top income contenders for Woodford’s crown

Financial advisers choose the most promising fund managers in the frame to claim Neil Woodford’s mantle.

 
Eight top income contenders for Woodford’s crown

Neil Woodford’s £11 billion Invesco Perpetual Income and £14 billion High Income funds currently dominate the UK equity income sector in size, but as the star manager prepares to leave Invesco in April 2014, many investors are mulling over alternatives.

Brian Dennehy, managing director of Kent-based Dennehy Weller & Co, said he liked Artemis Income , managed by Citywire AA-rated managers Adrian Frost and Adrian Gosden.

Dennehy said he recommended them to investors looking for consistency of payout growth.

‘The Invesco Income and High Income fund have excelled primarily as vehicles for total return,’ he said. ‘If you want a focus on income generation and payout growth, you should choose Artemis Income.’

Young Woodford

For those investors looking for a ‘young’ Neil Woodford, David Burren (pictured), managing director of Gloucestershire-based Warwick Butchart Associates, said he liked Nick Kirrage and Kevin Murphy of Schroder Income , another pair of Citywire AA-rated managers.

Jamie Fergusson, a consultant at London-based PQR Financial Planning, agreed with this choice.

‘Homespun talent hired from within the team at Schroders, these two managers look for companies that are out of favour, but that have the capacity to increase dividends over time,’ he said.

Solid performance

Eric Woodward, investment director at London-based Carrington Investments, recommended the Royal London UK Equity Income fund, run by Citywire AAA-rated Martin Cholwill.

Woodward started using the fund in March and currently has 5% of clients’ income holdings there. The fund yields 3.8%

‘Cholwill’s fund is not as widely held as some of the better-known names, but it has very solid performance characteristics,’ said Woodward.

Prime time

Austyn Smith, wealth management director at Beaconsfield-based Austyn James Consulting, said Matt Hudson, another Citywire AAA-rated manager, was the ‘one to watch’.

Smith (pictured) started using Hudson’s Cazenove UK Equity Income fund in January.

‘He’s in his early 40s: just entering the prime years in which to build his reputation as a stock picker and strategist,’ said Smith.

Future stars

Keith Churchouse, a director of Chapters Financial in Guildford, Surrey, has backed the Unicorn UK Income fund of Citywire AA-rated John McClure since mid-2010. He called McClure a ‘star for future times’.

‘At around £300 million in size, it’s not one of the giants, but it is big enough to inspire confidence,’ said Churchouse (pictured). ‘Its track record is very strong.’

Burren also recommended Rebecca Edelman of Neptune US Income .

‘She runs one of the smallest funds [at £19.3 million] and is probably the youngest green shoot of the new crop,’ he said.

Edelman joined Neptune in April 2008 as an investment analyst and became a fund manager in September 2010.

She maintains a balanced portfolio by investing in three silos: recovery, structural growth and tactical plays, with 15 stocks in each.

The fund yields 3.5%.

7 comments so far. Why not have your say?

Franco

Oct 29, 2013 at 19:25

A useless article tipping horses for the 3 o'clock at Haymarket and dropping names of little provincial IFAs like confetti at a wedding. Bare faced advertising. .

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Spartacus

Oct 29, 2013 at 19:44

What next, an article entitled "Where were you when you found out Woodford retired?"

For what it's worth, I read it on my stockwatch App on my Ipad at 11:08pm on 15th October.

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TJLamb

Oct 29, 2013 at 20:31

I love a bit of informed sarcasm!

Some people probably think these articles (which are everywhere) rate as genuine advice.

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richard tomkin

Oct 29, 2013 at 22:03

I hold Edinburgh Investment Trust shares.The board had tried several managers,before getting Mr Woodford to have his go.He did pretty well,all things considered,but I would caution against the cult of the 'star' manager.In the long run,which is what investment is about,anyone doing much better than the average is a rarity - so rare indeed that fretting all day about it is not a life well spent.

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John Minard

Oct 29, 2013 at 22:39

Breaking News; Woodford isn't going to retire! So the best alternative might well be Neil Woodford.

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William Phillips

Oct 30, 2013 at 10:58

Needless to say, no recommendation of investment trusts for income from these commission-feeders.

Newsflash: a 'yield' on an open-ended does not mean a great deal when the total distribution varies from year to year like a fiddler's elbow. Even Woody's IP megafunds could not ensure a steadily rising payout.

If, like most in this interest-starved era, you want an income fund for, er, income, then be aware that IT dividends may be frozen sometimes, but never get cut. They have reserves to back up their payments. Some have not reduced a dividend since the 1960s. But they don't grease the palms of 'independent' financial advisers.

Let us hope that full implementation of the Retail Distribution Review ends this bias.

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douglas gordon

Oct 31, 2013 at 02:15

I agree with the sentiments of the comments so far.

I hold a mixture of funds, ITs, ETFs & individual stocks for income. As far as funds are concerned, personally I wouldn't look past JO Hambro UK Equity Income and Newton Asian Income - the latter has recently suffered from the downturn in global & emerging markets. but I'm confident that it will recover (now is a buying opportunity, I'd suggest).

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  • Royal London UK Equity Income A
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  • Neil Woodford
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  • Adrian Frost
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  • Adrian Gosden
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  • Nick Kirrage
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  • Kevin Murphy
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  • Martin Cholwill
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  • Matthew Hudson
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  • John McClure
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