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Time to switch? The movers and shakers in the Income Study
by Rachael Revesz on Jan 28, 2013 at 13:32
The influential Sanlam Income Study, previously known as the Principal Income Study, has been published heralding harsh headlines for Neil Woodford whose Invesco Perpetual Income and High Income funds have been given a ‘sell’ rating. But it’s not all bad news, five funds were promoted onto the White List, and three moved up from Black to Grey. See all the movers, both up and down, by clicking through below.
Whiter than white
Unicorn UK Income
Unicorn UK Income has been bumped up onto the White List this year with its managers, Citywire AA-rated John McClure and A-rated Christopher Hutchinson, praised for standing out from the equity income crowd with a larger than average proportion of smaller companies and an attractive level of income.
The fund returned a net income of £20.40 on an £100 investment over five years, and ranks top of the list in the Citywire UK Equity Income sector for total returns over three and five years.
PFS Chelverton UK Equity Income
Premier Monthly Income
Another new entrant on the White List, the Premier Monthly Income fund made the grade after producing a net income of £22.40 on an £100 investment over five years.
Sanlam gave the fund a ‘hold’ rating, and singled out manager Christopher White for praise saying he had ‘steadied the ship’.
Rathbone Blue Chip Income & Growth fund
Another new kid on the block, or rather the White List, the Rathbone Blue Chip Income & Growth fund received a ‘hold’ recommendation having returned 17.1% over five years versus the FTSE All Share’s 13.2%.
Schroder Income Maximiser
The Schroder Income Maximiser fund has made it back onto the White List despite a period weaker performance in 2010 and 2011.
Sanlam said Citywire A-rated manager Thomas See had successfully used a derivative overlay to enhance income for investors and received a ‘buy’ recommendation.
The fund has returned a net income of £30.60 on £100 over five years, and ranks top of the White List in this category.
Shades of Grey
Invesco Perpetual High Income
The most high profile name on the Grey List, Neil Woodford’s demotion from the White List has grabbed all the headlines.
The star manager’s Invesco Perpetual High Income fund has dropped to the Grey List with Sanlam giving the £12 billion fund a ‘sell’ recommendation arguing that its size meant it was less able to be nimble and react quickly to changing markets.
Sanlam also recommended investors ‘sell’ Woodford’s £9.2 billion Invesco Perpetual Income fund due to its large size and its focus on large cap, defensive stocks, predominantly in health care and consumer goods.
‘We would prefer managers who are able to be more pragmatic in the face of swiftly changing circumstances,’ it said.
Threadneedle Monthly Income
The downgrade comes despite the fund returning 16.3% over five years beating both the FTSE All Share’s 13.2% and the FTSE 350 Higher Yield’s 5.6% over the same timeframe.
Fidelity MoneyBuilder Dividend
Like the Threadneedle Monthly Income fund the Fidelity MoneyBuilder Dividend fund beat the FTSE All Share and FTSE 350 Higher Yield over five years, returning a net income £20.80 on a £100 investment over the same period.
Henderson UK Equity Income
But being on the Grey List is not all bad news, or rather not if the fund was previously on the Black List.
The £349 million fund has returned a net income of £15.40 on a £100 investment over five years, the lowest on the Grey List.
However, Henderson has returned 16.4% over five years, beating both the FTSE All Share and FTSE 350 Higher Yield by a comfortable margin.
Also moving up was the Liontrust Income fund which was previously on the Black List.
Citywire A-rated managers James Inglis-Jones and Gary West produced a net income of £21.20 on a £100 investment over five years, but have undershot the FTSE All Share’s 13.2%, returning 8.9% over the same period.
Sanlam said: ‘With the team approaching their four year anniversary on the fund, their cash flow investment philosophy is bearing fruit. Having moved out of the Black List, we expect big things of the team here’
Ignis UK Equity Income
The Ignis UK Equity Income fund was also promoted onto the Grey List. The fund is run by Graham Ashby and returned a net income of £17.50 on a £100 investment over five years. Over the same period the fund delivered 7.7% compared to the FTSE All Share’s 13.2%.
Into the Black
And so to the Black List…..
Jupiter Income Trust
Anthony Nutt is soon to retire from his fourteen year tenure on the Jupiter Income Trust and Sanlam has therefore given the fund a ‘sell’ recommendation but advised investors to keep an eye on the transition of its management to Ben Whitmore.
Sanlam said the £1.9 billion fund had been a regulator on the White List for many years but has suffered weaker performance recently delivering 0.1% over five years, compared to the FTSE All Share’s 13.2%.
Insight Investment Equity High
Keeping questionable company with the Jupiter Income Trust was the Insight Investment Equity High fund which also dropped to the Black List in 2013.
The study said that Citywire A-rated Timothy Rees has returned a net income of £17 on a £100 investment over five years.
The £202 million fund has returned 10% over five years, beating the FTSE 350 Higher Yield’s 5.6% but falling short of the FTSE All Share’s 13.2%.
The PSigma Income fund has hit the Black List having delivered a net income of £17.70 since the end of 2007 on a £100 investment.
Bill Mott’s £387 million fund is mostly invested in UK listed large cap stocks such as GlaxoSmithKline, Royal Dutch Shell and Vodafone.
CF Canlife UK Equity Income
Also down to this year’s Black List is the CF Canlife UK Equity Income fund.
The £79 million fund is managed by Craig Rippe and returned a net income of £16.90 on an £100 investment over five years.