Most consistent funds of the decade: UK Equity Income
Portfolios run by Neil Woodford and Mark Barnett are joined in the elite list by the lesser-known RBS Equity Income fund.
Only three funds in the UK Equity Income sector can boast top-quartile returns in both five-year periods before and after September 2007, according to the latest FE Trustnet
The presence of FE Alpha Manager Neil Woodford will be of no surprise to UK investors, who, as FE Trustnet reported this morning
, continue to favour the manager’s portfolios.
Invesco Perpetual UK Strategic Income, headed up by FE Alpha Manager Mark Barnett
, is the fund house's second representative on the list.
Performance and sector position of funds over 5-yr periods
Source: FE Analytics
||Returns (%) 24/09/02 to 24/09/07
||Returns (%) 24/09/07 to 24/09/12
|Invesco Perp - High Income
|Royal Bank of Scot - Equity Income
|Invesco Perp - UK Strategic Income
The most surprising entrant is Royal Bank of Scotland Equity Income. At £59.8m in assets under management, it is 200 times smaller than the £11.984bn Invesco Perpetual High Income
fund, but it has performed better in the last five years, returning 24.37 per cent compared with the larger fund’s 16.66 per cent.
The portfolio was the fifth-best performer in the sector overall in that timeframe and the seventh best in the previous five years, making it the most consistent of the three funds, all of which have five FE crowns.
It is also the only fund out of the three to achieve top-quartile performance over the past year, with the two larger funds slipping into the third quartile.
Woodford’s outperformance in the earlier period means that Invesco Perpetual High Income is the best-performing fund in the sector over 10 years, returning 178.67 per cent to investors.
Performance of funds vs sector and index over 10-yrs
Source: FE Analytics
RBS Equity Income is third over the decade, while Invesco Perpetual High Income takes second place.
Although Woodford's fund made 150.45 per cent between 24 September 2002 and 24 September 2007, more than the other two funds on the list, it has slipped into the sector’s second quartile in the five years since then, returning just 15.52 per cent.
Barnett has beaten that figure with his Invesco Perpetual UK Strategic Income
fund, returning 21.38 per cent over the same period.
The £197.5m fund was the 14th-strongest performer between September 2002 and September 2007 and the 11th in the following five years.
For yield, the RBS fund comes out on top, paying 4.34 per cent to investors.
This is only a second-quartile figure for the sector, however, adding weight to the argument that the funds that provide the biggest dividends are rarely those that protect and grow capital the best.
For comparison, Invesco Perpetual High Income yields 3.79 per cent and Invesco Perpetual UK Strategic Income 3.56 per cent, both bottom-quartile figures for the sector.
The two Invesco Perpetual funds are available with a minimum investment of £500, while the RBS fund requires £1,000.
Invesco Perpetual High Income is the most expensive on the list, with a total expense ratio (TER) of 1.69 per cent.
RBS Equity Income has a TER of 1.32 per cent and Invesco Perpetual UK Strategic income 1.19 per cent – putting them both in the cheapest quartile of the sector.