Insight UK Equity Income, Invesco Perpetual Global Equity Income and Allianz RCM European Equity Income are among those reaching the milestone birthday, but only the Invesco fund, run by Paul Boyne and Doug McGraw, has beaten its sector peers since launch.
Performance of funds vs sectors over 3-yrs
Source: FE Analytics
Our data shows the fund has returned 55.2 per cent since March 2009, while the average fund in the sector returned 53 per cent. The Insight fund has lagged its sector by 0.3 per cent over three years, while the Allianz RCM product was 10 per cent behind its peers.
While its three-year performance is average, the yield of the Insight fund is much higher than its peers, at 8.5 per cent. The Allianz fund is yielding 4.67 per cent while the Invesco fund pays out 3.25 per cent.
"In theory the Insight fund’s yield is sustainable, but any fund paying such a high yield must have risk to the underlying capital," AWD Chase de Vere’s Patrick Connolly said. "Here the fund invests in shares, which can of course go down in value, and while some of the potential upside is given away in order to boost the yield, the full downside risks of the equity markets remain."
"We would never hold this type of fund in isolation, even for clients seeking a higher level of income, which says that despite giving an income kicker we don't feel confident that these funds will necessarily protect investors' capital."
All of the third-anniversary funds have been just about as volatile as their peers since inception.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
Another fund launched three years ago this month was BlackRock European Absolute Alpha, which has largely lagged its peers since then, but fared better than most in last August’s market rout.
Managed by Vincent Devlin, the £15.2m fund invests in a portfolio of equities and derivatives of companies from Europe, although from time to time it can hold cash and near-cash. It also invests in other transferable securities, money market instruments, deposits and other collectives.
Our data shows its biggest holdings at the moment are household names such as Ryanair and Nestle.
It has an FE Risk Score of 17, indicating it is far less volatile than the FTSE 100.