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Blacklisted! 10 highlights in Sanlam's UK equity income fund study

Sanlam Private PI's study has seen a number of changes over the last six months, with several new additions to its black and white lists.

The Ferrari of pension assets

Since its full year review in January, there has been plenty for investors to digest. These include the tapering of QE and conflicts in the Middle East and Ukraine.

One of the most exciting developments was the overhaul of pensions in the March Budget, which removed the requirement to buy an annuity on retirement from 2015.

'Of course there are naysayers who think that such a move will lead to pensioners splashing their savings on a new Ferrari, rather than prudently securing their financial stability,' says the Income Study's author Paul Surguy (pictured).

'At Sanlam, we are not ready to invest in the shares of luxury car makers quite yet, as we believe that those wise enough to save for their retirement will not squander their wealth so quickly.'

This presents an opportunity for equity funds and we highlight 10 which Sanlam has widely differing views on.

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White List additions

There was good news for Invesco Perpetual in its battle with former boss Neil Woodford as Citywire AA-rated Ciaran Mellon's fund was added to Sanlam's 14-strong list of top buys.

As at 30 June the fund had a net dividend yield of 3.3% and has produced a net income of 26.4% over the past five years, according to Sanlam.

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Following a strong 2014, Sanlam welcomed back Michael Clark's Citywire AA-rated Fidelity Moneybuilder Dividend fund to the White List.

'[The fund] has a rather simple investment style: SIRP, or safety of income at a reasonable price. For an equity income investor, it is hard to think of a better starting place,' Surguy said.

As at 30 June the fund had a net dividend yield of 4.1% and delivered 30.4% in income over five years.

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Meanwhile, the addition of Citywire A-rated Jonathan Barber's Threadneedle UK Monthly Income made it a hat-trick for Threadneedle. The fund sits alongside the Threadneedle UK Equity Income and Threadneedle UK Equity Alpha Income funds, managed by AA-rated Leigh Harrison and AAA-rated Richard Colwell.

'Marrying economic analysis with company meetings and research is a skill not all can master; Leigh Harrison and Richard Colwell obviously can,' Surguy said.

Barber's fund had a net dividend yield of 3.8% as at 30 June with a net income of 29.2% over five years.

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White List drop outs

The addition of these funds came at the expense of the AXA Framlington Monthly Income fund, managed by Citywire A-rated George Luckraft.

The fund, which yields 3.9% and delivered net income of 29.2% over the last five years, has moved down to the Grey List.

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Citywire A-rated Stephen Message's Old Mutual UK Equity Income fund was also demoted to the Grey List.

The fund has a net dividend yield of 4.4% and yielded 30.5% over the last five years.

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Stephen Bailey and Jan Luthman's Liontrust Macro Equity Income fund also fell down to the Grey List.

This fund was on a yield of 3.8% at 30 June has produced an income of 28.2% over the last five years.

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Black List additions

Sanlam's sell list controls several billion pounds worth of assets and saw a number of new entries.

These included the £366 million BlackRock UK Income fund, which has been managed by Adam Avigdori since November 2009. Last September Mark Wharrier was appointed co-manager on the fund.

While this fund has a relatively healthy dividend yield of 3.8% and has produced a 25.9% income over five years, its total return of 80% over the last five years is some 20% below the peer group average.

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The £194.4 million F&C UK Equity Income fund is another which has been blacklisted.

This fund, which was handed to + rated Michael Ulrich at the start of the year is yielding 3.9% and registered a net income of 29.2% over five years. It has returned 80% during this period.

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The £300 million JPM UK Higher Income fund has also been blacklisted.

In July 2012 Ian Butler and Ben Stapley joined forces with Thomas Buckingham on the fund, with the trio all rated by Citywire for decent performance on their other mandates.

JP Morgan will be hoping the trio can help revive the fund, which has marginally underperformed the peer group with a total return of 96.7% over the last five years. The fund has a dividend yield of 3.8% and has posted a net income of 25.3% over the last five years.

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+ rated Ian Wells and Douglas Scott's Kames UK Equity Income fund also finds itself on the Black List.

The fund has been managed by the pair since June 2009 and has posted a total return of 96.9% over the last five years. It currently yields 3.9% and has produced an income of 3.9% over the last five years.

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Related Fund Managers

Mark Wharrier
Mark Wharrier
7/99 in Equity - UK Equity Income (Performance over 1 year) Average Total Return: 10.75%
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71/102 in Equity - UK Equity Income (Performance over 3 months) Average Total Return: -0.07%
Ciaran Mallon
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Ian Butler
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Ben Stapley
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Thomas Buckingham
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54/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 49.35%
Iain Wells
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58/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 47.66%
Douglas Scott
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59/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 47.66%
Stephen Bailey
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52/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 50.91%
Jan Luthman
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53/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 50.91%
Stephen Message
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