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Citywire ratings: 10 UK equity income stars
by Nisha Long on Aug 19, 2013 at 08:38
In our latest monthly number crunch, we take a look at 10 funds which are leading the way in the highly competitive UK equity income sector.
Richard Colwell and Leigh Harrison
Richard Colwell has been AAA rated every month from March 2013 to August 2013. Although he had achieved the AAA on two previous occasions, this is his longest run on our top rating.
He manages several funds, but the largest is Threadneedle UK Equity Income. He manages it alongside Leigh Harrison, who is A rated this month.
Over the last three years the pair have generated returns of 60.8% on the fund; outperforming the FTSE 350 Higher Yield index which rose 50.7%.
The Threadneedle UK Equity Income fund is a Citywire Selection star pick, and has a yield of 3.5%.
At the start of the year the duo upped exposure to core holdings in pharmaceutical giants GlaxoSmithKline and AstraZeneca, in which they held 5.3% and 4.7% respectively at the end of July.
David Taylor and David Horner
At the end of June they added to twelve of their existing holdings, including TT Electronics and VP Plc, an equipment rental company. Stocks contributing to performance recently include Numis and National Express.
For the three years to the end of July, the fund returned 88.6%, outpacing the FTSE 350 Higher Yield benchmark, which rose by 50.7% over the same period.
The fund has a yield of 5%.
Alan Dobbie has moved up a rung to achieve the top rating, an AAA.
He co-manages the Rathbone Blue Chip Income & Growth fund alongside Julian Chillingworth who is A rated.
The fund aims at a steady increase in income coupled with capital growth. At the end of June their top holdings were the multinational utility company Centrica and publisher and information provider Reed Elsevier. Their main sectors were oil and gas, and basic materials.
The fund’s yield is 3.8%.
Matthew Hudson, manager of the Cazenove UK Equity Income, has gone up one notch in the ratings to regain his AAA. He has managed the fund since its inception in May 2005. Over this time the fund has risen 133.9%.
Hudson recently increased exposure to areas he thinks will benefit from the cyclical recovery. He added positions in Debenhams and International Consolidated Airlines, funding the purchases by selling down Provident Financial and BAE Systems.
Although he remains underweight commodity cyclicals he has exited his position in BG in order to add buy higher yielding BP. He has increased his position in Rio Tinto. Recently, Hudson took part in the IPO of Partnership Assurance, the specialist writer of non-standard annuities.
Over the three years to the end of July, the fund has risen 72.8%, outperforming the FTSE 350 Higher Yield benchmark which rose by 50.7% over the same period.
The fund’s yield is 4%.
Martin Cholwill is AA rated this month for his three year risk adjusted performance on the Royal London UK Equity Income fund.
Cholwill focusses on high income yielding mid cap. In July stocks contributed positively to performance included Atkins and BAE Systems. He took some profits on IG Group and Dunelm after good runs and invested more into some of his existing holdings including HSBC and Rio Tinto.
For the three year period to the end of July, the fund rose 69.1% whilst the FTSE 350 Higher Yield index rose by 50.7%.
Mark Barnett, manager of the Invesco Perpetual UK Strategic fund, has won an AA rating for his three year risk adjusted performance. The fund has a yield of 3.4%.
At the end of June his top holdings were BT and Roche. The departure of BT chief executive Ian Livingston, to take on the role of Minister of State for Trade, has not fazed Barnett. He retains BT as one of his key holdings. His main sector weightings are in healthcare (23.4%) and financials (17.5%).
James Henderson has gained an AA rating for his three year risk adjusted performance on the Henderson UK Equity Income fund, which has returned 74.7%. In comparison, his Citywire assigned benchmark, the FTSE 350 Higher Yield index rose by 50.7%.
Henderson maintains a low turnover portfolio. During July he reduced his holding in his largest holding, Senior, for portfolio balancing reasons, but he remains bullish on it.
More than half of his portfolio is invested within Industrials and financials which he holds at 38.8% and 27.4% respectively.
The fund’s yield is 3.4%.
Chris Watt is AA rated for his three year risk adjusted performance on the Jupiter Responsible Income fund and the Jupiter Growth & Income fund. The Jupiter Responsible Income fund lies within the UK equity income sector, and over the last three years has returned 53.8%.
The fund invests in companies which make a contribution to environmental sustainability or social well-being, and avoids tobacco, armaments, nuclear power and animal testing. At the end June its main holdings were HSBC (6.9%) and GlaxoSmithKline (5.9%).
The Jupiter Responsible income fund has a historic yield of 3.5%.
Jeremy Lang and William Pattisson
Jeremy Lang gains an A rating for his 30 month risk adjusted performance on Ardevora UK Income and the MGTS Ardevora UK Income fund.
He co-manages the Ardevora UK Income fund with William Pattisson who is also A rated this month. This is not the first time Lang has held a rating. The last time was in September 2008, when he was A rated and managed the Liontrust Income, Liontrust First Equity and Liontrust Distribution funds.
Ardevora UK Income has more than 30% in consumer discretionary stocks, and top holdings at the end of June were British retailer of home furniture and fixtures, Dunelm Group and satellite telecommunications company Immarsat.
Nick Kirrage and Kevin Murphy
Nick Kirrage and Kevin Murphy re-enter the ratings with an A rating for their three year risk adjusted performance across various funds: Schroder Income, Schroder Recovery, Schroder Specialist Value UK Equity and the St James's Place Managed Growth.
The last time the duo held a rating was in April 2012. Their risk adjusted performance has steadily increased over the past year, enough to warrant a rating.
On the Schroder Income fund, for the three year period to the end of July, the duo have generated returns of 46.7% on the fund and the dividend yield of the fund is currently 3.8%.
Kirrage and Murphy focus on more than just the current dividend a company is paying and avoid the very highest paying divided payers if they don’t believe in their long term fundamentals. They are currently 15% invested overseas with a strong focus on US tech stocks.
The pair still think pharma stocks remain relatively attractively valued and the sector continues to be one of the strongest drivers of performance. AstraZeneca and GlaxoSmithKline remain within their top five fund holdings at 5.9% and 5% respectively.