PENSION
THREADNEEDLE
UK EQUITY INCOME
This top-rated fund isn’t afraid to stray away from mainstream stocks to deliver a
reliable long-term income
trustnet.com
Their willingness to drift away
from their benchmark does not
come at the expense of stability,
which is demonstrated by the fund’s
top-quartile volatility rating of 12.79
per cent over 10 years.
Square Mile, which has
awarded the fund an ‘AA’ rating,
says: “This is a sensibly run UK
equity income fund which has
a bias towards larger companies.
Although Columbia Threadneedle
is a large institution, the
investment teams act with a
fair degree of autonomy and the
managers are encouraged to run
their funds based on their own
convictions.”
“The managers believe that
consensual group thinking rarely
leads to outperformance and the
process has been designed to
avoid this. The yield requirement
does lean the portfolio towards
more valuation-dependent
situations as opposed to growth
opportunities, although the
managers strive to keep a broadly
balanced approach as much as
the income requirement allows.”
Threadneedle UK Equity Income
has a clean ongoing charges
figure (OCF) of 0.82 per cent and
yields 4 per cent.
MANAGERS: Leigh Harrison and
Richard Colwell
FUND SIZE: £3.4bn
LAUNCH DATE: 30/09/1985
OCF: 0.82%
CROWN RATING:
PERFORMANCE OF FUND
VS SECTOR AND BENCHMARK OVER 10YRS
175%
IA UK Equity Income (113.75%)
FTSE All Share (116.83%)
Threadneedle - UK Equity Income (167.07%)
150%
125%
100%
75%
50%
25%
0%
Jun 14
Jun 13
Jun 12
Jun 11
Jun 10
Jun 09
Jun 08
Jun 07
Jun 06
-25%
Jun 05
T
hreadneedle UK Equity
Income is a giant in the asset
management world in terms
of both size and reputation.
Launched in 1985, the fund is
£3.4bn in size, has a five crownrating from FE and is run by FE
Alpha Manager Leigh Harrison and
Richard Colwell.
It has performed consistently
well over the long term, beating its
sector and benchmark over 20, 15,
10, five and three years.
The most significant period of
outperformance has come over the
past decade: its returns of 167.07
per cent mean it has beaten its
sector average and benchmark by
53.32 and 50.24 percentage points
respectively.
Many retirees would prefer
bonds over equities for their safety
and a global fund over a UK one for
diversification purposes. However,
Threadneedle UK Equity Income’s
use of equities adds more scope
for growth in terms of capital and
income, and it also offers more
diversification than most UK
income funds.
For example, Harrison and
Colwell don’t limit themselves
to investing in the top 20 biggest
income names, like most funds of
its size often do.
While the managers hold at
least 70 per cent of their fund in
blue chips, they allocate 3.5 per
cent to Morrisons, for example,
which is the smallest of the “Big
Four” supermarkets listed on the
FTSE 100.
Source: FE Analytics
15