Skip to the content

FE income campaign: Fund groups gear up to add dividend history to factsheets

22 October 2014

Our campaign has made a strong start, with the likes of Troy and Allianz set to increase the amount of information they provide to income investors, and others reviewing their current processes.

By Gary Jackson,

News Editor, FE Trustnet

ALT_TAGA number of fund groups have revealed that they are in the process of reviewing how income information is communicated to investors after FE Trustnet contacted them about our campaign to improve dividend transparency, with some preparing to make material changes.

Earlier this month, we launched our campaign for more income information to be presented on factsheets after pointing out that yield – the most commonly offered piece of information – does little to enlighten investors in how good an income source their fund is in reality.

The campaign was well-received, with a poll finding out that 78 per cent of readers want to see more income information on factsheets and many people getting in touch to offer their support.

FE Trustnet has since contacted every group with a fund in the IMA UK Equity Income sector to find out if they are planning to add more details on factsheets, such as the actual dividend paid per unit, to offer investors more information when reviewing their holdings.

We’re still waiting for many of the responses, but several have plans to increase the amount of information on their factsheets while others are reviewing the best way to improve how they communicate income performance to investors.

Our research showed that around 80 per cent of the sector does not publish additional dividend data on their factsheet while 13 per cent don’t even publish the yield, which is seen as the most basic piece of income information.

FE Trustnet understands that Troy Asset Management and Allianz Global Investors will soon be adding dividends paid to the factsheets of their UK equity income funds.

Troy’s £1.7bn Trojan Income fund, which is run by FE Alpha Manager Francis Brooke (pictured), was the best rated fund in FE Research’s recent income study.

It scored 291 out of a total 300, with a perfect 100 for its downside protection, 96 for yield and 95 for downside protection. Troy says it will add dividend history to its factsheet in the near future – possibly on its next edition.

Income earned by funds over 10yrs

ALT_TAG

Source: FE Analytics


Allianz GI, meanwhile, plans to add the data point to the factsheet of Simon Gergel’s Allianz UK Equity Income fund over the coming year.

“Our guiding principle with all our factsheets is that they should be as transparent, informative and user-friendly for investors as possible,” a spokesperson said.

“We recognise that in the current low interest rate environment, income has undoubtedly become an even more important theme for clients and so we plan to introduce dividend information to the equity income fund factsheet over the next 12 months.”


BlackRock, which has the £344.5m BlackRock UK Income fund in the UK Equity Income sector, is currently reviewing the addition of historic dividends paid to its factsheets.

Tony Stenning, head of the asset management house’s UK retail business, says there are several reasons why the industry has not included historic dividends on their factsheets.

These include the fact that investors tended to choose equity income funds on a total return basis rather than their income paid.

“Having information such as the amount of dividend paid and the growth of those dividends has become an increasing focus for advisers and end investors. This has been prompted by the unprecedented low levels of income available from traditional sources like government bonds and cash forcing people to seek alternative sources of income,” Stenning said.

“Another reason why historic dividend information has not featured on factsheets is due to a lack of comparative information available to investors making it very difficult to ascertain the dividend growth history, but hopefully this is about to change.”

Aviva Investors is also considering publishing the information for Chris Murphy's £956.6m Aviva Investors UK Equity Income fund.

“We are in the process of reviewing our factsheet content to ensure that appropriate information is given investors to enable a full understanding of what a fund has said it will deliver has been delivered. Where appropriate, and if possible, we will look to incorporate the changes,” a spokesperson told us.

Standard Life Investments, which does not put yield information on Karen Robertson's £535.3m Standard Life Investments UK Equity High Income and Thomas Moore’s £679.6m UK Equity Income Unconstrained fund factsheets, points out that this is available online but is also reviewing changes to its factsheet.

“Standard Life Investments is committed to ensuring that investors have clear and unambiguous information about the funds they invest in,” the group said.

However, not all groups are willing to consider changing the documents.

Santander Asset Management has three portfolios in the IMA UK Equity Income sector - Stephen Payne’s Dividend Income Portfolio, Enhanced Income Portfolio and Equity Income funds - and none include yield or historic dividends on their factsheets.

A spokesperson for the group said: “As a prudent fiduciary we are will always strive to the best outcomes for our advisers and investors and regularly review fund performance and disclosures. Our fund factsheets comply with current industry standards and provide clear and relevant information for readers."

Others want to see greater consideration to finding the best way of presenting income information, arguing that dividend history or income earned have problems of their own.

Invesco Perpetual remains a force in the UK equity income space despite only having one fund - Invesco Perpetual Income & Growth - in the IMA UK Equity Income sector.

Mark Barnett’s Invesco Perpetual Income, High Income and UK Strategic Income, which moved into the IMA All Companies sector last year, remain popular options with income investors.

The firm does not publish the dividend paid on its factsheets but says it would be open to considering extra income information - if the right way to present it could be found.


Ian Trevers, head of UK retail at Invesco Perpetual, said: “The issue is very close to our hearts but the challenge is finding a way to do this well. Obviously, the income paid on £1,000 invested depends on when the £1,000 was invested. That is the presentational challenge and if you have cracked a way to show that, then I’d be very interested in seeing it.”

“What investors are looking for is income not yield and there is a big difference between the two. We’re always looking for ways to improve the presentation of income.”

One of the most common responses we had from fund groups was that they have received no specific requests from their investors for extra income information to be included in factsheets.

Some said they would be happy to include this if there were enough demand from clients.

So FE Trustnet would like your help on the campaign. If one of your holdings doesn't put dividends on its factsheets and you want to see this information, please drop them an email telling them what you want included.

There’s still a long way to go so we'll keep contacting them as well, in addition to publishing further studies based on income.

In the next article of the campaign, FE Trustnet will look at how the former members of the IMA UK Equity Income sector have done from an income point of view, despite failing to hit the sector’s yield requirement.

Do you have any other concerns about the way income information is made available? If so, leave a comment below or email us at editorial@financialexpress.net.

ALT_TAG

Editor's Picks

Loading...

Videos from BNY Mellon Investment Management

Loading...

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.