AXA Framlington Monthly Income, Jupiter Monthly Income and Threadneedle Monthly Extra Income are among the funds that pay a monthly income stream and have some of the highest FE Crown Ratings. 
While it is entirely possible to build an income portfolio using only funds that pay out quarterly or even less frequently, some funds aim to make the process easier and are managed to offer monthly income payouts to their investors.
There are close to 290 funds in the Investment Association universe that pay 12 dividends a year, so in this article we will look across the UK sectors to find out which measure up the best according to FE's Crown Ratings.
FE Crown Fund Ratings are quantitative ratings ranging from one to five and are designed to help investors identify funds which have displayed superior performance in terms of stockpicking, consistency and risk control. They are designed to distinguish between funds that are strongly outperforming their benchmark and those that are not, although it must be kept in mind that past performance is no guide to the future.
The top 10 per cent of funds under the system are awarded five FE Crowns, the next 15 per cent receive four Crowns and each of the remaining three quartiles get three, two and one Crown(s) respectively.
Narrowing this down, we see that there are eight monthly income funds in the IA UK Equity Income and IA UK Equity & Bond Income sectors that hold four or five FE Crowns.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
The fund that has made the highest total return over five years is the AXA Framlington Monthly Income, which is headed up by George Luckraft. It has made 100.19 per cent over this time frame; what's more, an initial investment of £10,000 would have led to income payment of £2,969 over the same period - the highest of the shortlisted UK equity income funds.
Luckraft has an unconstrained, multi-capitilisation investment approach and focuses on generating income; the portfolio is built around international-facing large-caps paying a high yield and fast growing smaller caps. British American Tobacco, Royal Dutch Shell and BP are the £252.7m fund's largest holdings at this time.
The manager explained: “The holdings in the portfolio are concentrated on the leaders within sectors on the expectation that that in a tough economic environment the strong will get stronger.”
The fund is the only IA UK Equity Income sector member to hold five FE Crowns and pay out a monthly dividend. However, those with four FE Crowns include Fidelity Moneybuilder Dividend, HL Multi Manager Income & Growth and Threadneedle UK Monthly Income.
As the below chart illustrates, all three of these funds have outpaced the FTSE All Share index for total returns over the past five years - although not all have beaten their average peer.
Performance of funds vs sector and index over 5yrs
Source: FE Analytics
When it comes to income payments over the same period, Fidelity Moneybuilder Dividend has paid out £2,723 on an initial £10,000 investment, HL Multi Manager Income & Growth has distributed £2,721 and Threadneedle UK Monthly Income paid out £2,641.
Income investors could also pay more attention to the risk profile of their funds if they are seeking to avoid too much volatility.
The fund with the lowest FE Risk Score – which measures volatility relative to the FTSE 100 – is AXA Framlington Monthly Income with its score of 62. Threadneedle UK Monthly Income follows with an FE Risk Score of 78, HL Multi Manager Income & Growth's stands at 84 and Fidelity Moneybuilder Dividend's is 85.
Within the IA UK Equity & Bond Income sector, we have three monthly income payers with an FE Crown Rating of five and one with a four-crown rating.
Jupiter Monthly Income, which is managed by Richard Curling and holds five FE Crowns, has paid out the most income of these IA UK Equity & Bond Income fund after distributing £3,076 over five years on a £10,000 initial investment. It has made 82.52 per cent total return over this time.
The £394.4m fund aims for a high level of income through a portfolio of investment trusts, with some exposure to fixed income assets. European Assets is its biggest holding at present, followed by Investors Capital Trust and Schroder Oriental Income.
Performance of funds vs sector and index over 5yrs
Source: FE Analytics
Threadneedle Monthly Extra Income has paid out £2,549 over the five-year period, Threadneedle Managed Equity Income distributed £2,445 and HSBC Monthly Income paid £2,218.
As the above chart shows, the fund posting the highest five-year return is the five crown-rated Threadneedle Monthly Extra Income, followed by Jupiter Monthly Income and Threadneedle Managed Equity Income, which also has five crowns. All these funds are in the top quartile of the sector over five years.
HSBC Monthly Income is in fourth place and has four crowns; this return puts the fund in the bottom quartile of the sector.