Cazenove UK Equity Income – 3 Crowns to 5 Crowns
Matthew Hudson’s £100m fund has doubled in size since last August, having consistently outperformed the IMA Equity Income sector in the recovery since 2008.
Over five and three years it is in the top quartile of its sector for returns, while its total expense ratio (TER) of 1.58 per cent is comparatively low.
Performance of fund vs sector and benchmark over 5-yrs
Source: FE Analytics
However, the yield on offer is relatively modest for an income fund – its figure of 4.2 per cent is below average for the sector.
The fund is overweight mid cap companies, with 28.3 per cent of its holdings in this bracket compared with the index’s 12.7 per cent.
The portfolio has the modest aim of outperforming the FTSE All Share by 1.5 per cent over rolling three-year periods, and data from FE Analytics shows it has comfortably achieved this.
It is suitable for retail investors, with a minimum investment of £1,000.
Aberdeen UK Equity Income – 4 Crowns to 5 Crowns
Aberdeen Asset Management is best known for its top-performing Asian and emerging market funds, but the performance of this UK fund shows the firm has something to offer closer to home.
Its returns over three years are almost identical to the Cazenove fund, and although it slips into the second quartile of the sector over longer periods, 10-year returns of 100.35 per cent are still significant.
Like all of Aberdeen’s open-ended funds, it is team-oriented.
Investors can gain access with only £500 and the TER is 1.62 per cent – around the sector average. It has a yield of 4.5 per cent.
Royal Bank of Scotland Equity Income – 3 Crowns to 5 Crowns
This fund, co-managed by Daniel Roberts and FE Alpha Manager Chris Murphy, is currently in the top quartile over every time period recorded in FE Analytics, from one month to 10 years.
Performance of fund vs sector over 5-yrs
Source: FE Analytics
Its yield of 4.6 per cent is also top quartile and is the best out of all the funds on this list.
With a TER of 1.32 per cent it is cheaper than the average fund and it is available with a minimum investment of £1,000.
Henderson UK Equity Income – 3 Crowns to 5 Crowns
Gains of 73.29 per cent make this the second-best performer out of 91 funds in the sector over three years.
FE Alpha Manager James Henderson focuses on engineering firms, particularly those in the aerospace industry, and has 42.2 per cent of his fund invested in industrials.
The annualised volatility of 23.47 per cent over five years is seven points higher than the sector average; however, a max drawdown of 17.04 per cent puts it in the bottom quartile for this measure.
However, the fund has yet to make back the money it lost in 2008, meaning it is more suited to the adventurous investor who believes there is a high chance of a recovery.
Performance of fund vs sector and benchmark over 5-yrs
Source: FE Analytics
It has a minimum investment of £1,000 and a TER of 1.75 per cent.
Invesco Perpetual Income & Growth – 3 Crowns to 5 Crowns
FE Alpha Manager Ciaran Mallon’s portfolio is overshadowed by the Invesco Perpetual High Income fund in the popularity stakes; however, Invesco Perpetual Income & Growth has had a very strong three years, outperforming Neil Woodford’s £11.5bn portfolio – albeit with more volatility.
With £473m assets under management (AUM), Invesco Perpetual Income & Growth is far more nimble than Woodford’s two portfolios.
While it is also overweight defensives, it has far smaller positions in the likes of GlaxoSmithKline and AstraZeneca, which have a combined weighting of more than 16 per cent in each of Woodford’s portfolios.
Mallon’s fund also has a greater yield – 4.23 to 3.81 per cent – although it is marginally more expensive.
Invesco Perpetual Income & Growth has a minimum investment of £500. Mallon took over as lead manager in July 2005.