One look at the performance tables and it is easy to see why: FE data shows that Artemis Income has consistently outperformed its sector average and FTSE All Share benchmark, with significantly less volatility.
Performance of fund vs sector and index over 10-yrs
| Name | 1yr (%) | 3yr (%) | 5yr (%) | 10yr (%) |
|---|---|---|---|---|
| Artemis Income | 18.06 | 34.65 | 53.17 | 206.32 |
| IMA UK Equity Income TR in GB | 17.01 | 33.78 | 41.77 | 152.46 |
| FTSE All Share TR in GB | 15.13 | 30.02 | 44.68 | 165.85 |
Source: FE Analytics
Frost and Gosden invest predominantly in large cap dividend-payers such as Vodafone and AstraZeneca, but they also hold lesser-known, higher-growth names outside their top-10.
Here are five of the managers' highest-conviction plays:
Cobham
Frost and Gosden are currently backing Cobham – a British manufacturing company based in Dorset.
The firm, which is also held in Tom Dobell’s M&G Recovery fund, makes up 1.23 per cent of the Income portfolio.
The £2.8bn company is trading on a price to earnings (P/E) ratio of 11.8 and is yielding 4 per cent – in line with its figure over the last two years.
According to The Share Centre, Cobham’s yield is expected to rise to 4.4 per cent by the end of 2014.
The aerospace and defence company has lagged both the FTSE 250 and FTSE 350 Aerospace & Defense index over one, three, five and 10 years, although it has consistently delivered positive returns.
Over the last five years the stock has made 41.14 per cent, while the FTSE 250 has gained 72.22 per cent.
The FTSE 350 Aerospace & Defense index picked up 68.86 per cent, according to our data.
Performance of stock vs indices over 5yrs
Source: FE Analytics
Four funds in the IMA universe hold Cobham in their top-10, including Aberdeen UK Mid Cap.
Laird
Laird is an electronics, security systems and distribution business with operations in North American, Europe and Asia.
It has an eclectic history, having started as a shipbuilder for the Royal Navy. It previously ran a mass transit railway system before transitioning into security products and electronics.
Laird is trading on a P/E ratio of 11 with an attractive yield of 5.2 per cent. This yield has increased from 4.8 per cent last year and is expected to rise to 5.8 per cent by the end of 2014.
Laird has had a bumpy ride over the past decade. The stock significantly lags the FTSE 250 index and the FTSE 350 Electronic & Electrical Equipment index over 10 years, and it lost nearly 40 per cent of its value over five.
However, it has surged ahead over three years, picking up 102.81 per cent, compared with 51.85 per cent from the FTSE 250.
Laird has a market cap of £600m.
Only one IMA fund – Querns Monthly Income – holds the company in its top-10.
Marston’s
Marston’s, which was known as Wolverhampton & Dudley Breweries until 2007, is now the world’s largest brewer of cask ale. It also owns more than 2,000 pubs across the UK.
The firm is trading on a P/E ratio of 10.9. It has an attractive yield of 4.8 per cent, slightly down from last year when it was paying out 5.3 per cent.
The yield level has been in steady decline since 2008, but is expected to slightly increase to 4.8 per cent at the end of September next year.
The company has a market cap of £812.6m.
While the brewer has trailed the FTSE 250 index and the FTSE 350 Travel & Leisure index over five and 10 years, it has posted strong returns over one and three years, beating both indices by more than 30 percentage points over the longer period.
Performance of stock vs indices over 3yrs
Source: FE Analytics
FE Alpha Manager Julian Lewis’ Cavendish UK Balanced Income portfolio is the only fund that holds Marston’s in its top-10.
Halfords
Halfords is a British-based retailer that sells car parts, camping gear and bicycles. It currently makes up 0.64 per of Frost and Gosden’s portfolio.
The £631.5m firm is trading on a P/E ratio of 11.5. It is the highest-yielding company on this list, at 6.8 per cent – in line with its yield for the last two years.
Over the last five years, Halfords has gained 54.42 per cent, behind both the FTSE 250 index and the FTSE 350 General Retailers index.
It had a difficult period over three years, losing 19.63 per cent, but has returned to positive growth over 12 months, although it still lags both indices.
Halfords is a top-10 holding of Querns Monthly Income. SF Metropolis Value also holds it.
William Hill
The ever-growing presence of online-gambling sites has prompted Frost and Gosden to buy a stake in William Hill.
The bookmaker makes up 1.55 per cent of the portfolio and is trading on a P/E ratio of 13.5. Its yield has been in decline over the last two years, having dropped to 2.9 per cent this year from 5.1 per cent in 2011.
However, the yield is predicted to rise to 3.2 per cent in 2014.
Over the last 10 years, William Hill has made 151.98 per cent. It has delivered particularly strong performance over three years, when the stock surged 110.41 per cent, beating the FTSE 250, which was up 51.95 per cent.
The stock is more popular among fund managers than the the other stocks in this list, with 13 funds holding it in their top-10. These include Cavendish Worldwide, MFM Slater Income – which is headed up by FE Alpha Manager Mark Slater – and SVM UK Opportunities.