It was good news back in 2017 for some UK Equity Income funds as the Investment Association decided that the ‘Hokey Cokey’ was the way to go. Some 20 funds had been put “out” of the sector since 2013 for failing to meet the yield requirements. The fund manager trade body said there was a “near 50-50” split on whether to scrap the requirement for a fund to yield 10% more than the FTSE All-Share over a rolling three-year period. Expanding their consultation to consumers and advisers, and clearly with the consultation of the funds that were “out”, it was decided to change the rules and allow them “in”.
An income fund does need to yield more than that of the stock market – one wonders if some fund name changes might have been appropriate so that consumers were clearer on what they were buying.
The Kames UK Equity Income Fund does not like to “shake it all about”. It has been in the IA UK Equity Income sector since it was launched nearly 10 years ago. All companies it invests in must pay a dividend that is secure. The fund currently yields 17% more than the FTSE All-Share. Is another “Quickstep” consultation on the judge’s mind followed by a turnaround?
Kames UK Equity Income Fund is only available for sale in the UK.
Opinions and views from the Equities team at Kames Capital are not an investment recommendation, research or advice and should not be considered as such. Content discussing investment strategies and stocks is derived from and solely relates to the investment management activities of Kames Capital.
About the author
Douglas Scott is an investment manager in the UK Equities team with responsibility for managing several equity income funds. In addition, Douglas has analysis duties for the tobacco, real estate, telecoms, beverages and oil services sectors. He joined us in 2003 from Investec where he was a stockbroker specialising in the telecoms sector and, prior to that, worked for TRW and Abbey National in their UK equity teams. Douglas has a 1st Class Honours degree in Aeronautical Engineering from the University of Glasgow and a Diploma in Actuarial Science from Heriot-Watt University. He has 23 years’ industry experience*. *As at 30 April 2019.