Data from FE Analytics shows that the fund has an annual historic yield of 4.64 per cent while star manager Neil Woodford’s Invesco Perpetual Income fund yields 4.04 per cent and the Rathbone Income fund yields 4.38 per cent.
It is headed up by FE Alpha Managers Adrian Frost and Adrian Gosden, who put an emphasis on both income and capital growth, and look to diversify their portfolio with large, mid and small cap companies.
"We continue to stick to dividends that are good, and that we expect to be repeatable and to grow," said Frost and Gosden in a recent note.
"The creeping appreciation of this is the key to returns in the coming years. It is a constant around which the barometer of 'risk on, risk off' will rise and fall. We reduced Novartis in favour of Abbot; and Unilever in favour of BAT. We lowered the oil exposure through reducing Shell and selling Chevron. The latter has outperformed most oil majors and cash-flow and yield is no longer attractive."
Over the last decade the fund has returned 112 per cent compared with 74 per cent from the average fund in the sector. While the Invesco Perpetual Income and High Income funds have returned 142 per cent and 147 per cent respectively, many IFAs say that the Artemis fund is a great alternative.
Performance of funds vs sector over 10-yrs
Source: FE Analytics
"It’s hard to differentiate between the giants of the UK Equity Income sector," said Kerry Nelson, managing director of Nexus IFA. "Because of their size, many of the funds are forced to hold the most liquid stocks so you see really similar holdings."
"Everybody knows about Neil Woodford but you never want to rely on one manager for your exposure and the Artemis fund is a great alternative. High profile managers in the sector such as Bill Mott and Neil Woodford have had recent periods of underperformance but Frost and Gosden have made the right calls and are waiting for the market to come to them."
"After a bad 2011 UK Equity Income funds are due a comeback and with markets not expected to return much capital growth, the dividend story is incredibly important to investors these days. The Artemis fund has a decent yield and should help in that respect."
Alternatives
Neil Woodford’s funds are impossible to ignore in this space. The manager has been incredibly consistent and his investment process is well regarded and widely duplicated. Frequently topping the performance table over most periods, Woodford is the first choice for many investors.
For something a bit different, the more nimble Unicorn UK Income or Marlborough UK Income & Growth funds offer interesting alternatives. With £38.8m and £24m assets under management respectively, the funds focus on companies further down the capitalisation spectrum. With returns of 135 per cent over the last three years compared with 62 per cent from the sector average, the Unicorn fund is the top-performer in the sector over three years. Both are headed-up by FE Alpha Managers.
Verdict
Investors are spoilt for choice in the UK Equity Income sector. Many of the funds have top managers and impressive track records and for most people’s exposure, any of the big names will suffice.
However, Artemis Income suits investors who are looking for a good balance of capital growth and yield.
Click here to read last week’s "Funds for your ISA".