Rated Fund 2014-2017. A long record of rising income
Rathbone Income is a fund that investors are likely to be able to put in their portfolio and forget about. It has a long record of increasing its income payments, only failing to do so once in the past 17 years since Carl Stick took over as manager in 2000.
Its current yield is 3.6 per cent and it pays income half-yearly. The fund can invest in dividend-paying companies of any size and has a concentrated portfolio of 30 to 50 holdings. Stick believes that adding further holdings to try to spread risk is only distracting.
Stick's investment style is a mixture of both value and growth. He targets growth because he wants the dividend stream to grow year on-year, and value because he wants to buy shares that offer the greatest value and provide a high earnings yield.
He looks for the best companies he can find by relying on 'simple ideas' such as earnings and dividend growth, a recognition of quality businesses, management teams and products, and also paying the right price for them.
Although most of his holdings are in the FTSE 100 index, around 35 per cent of the portfolio is invested in medium-sized and smaller companies for diversification.
Stick believes he gains an edge from taking a longer-term perspective of business prospects, looking beyond short-term headwinds to a time when underlying characteristics are re-asserted. His average holding period is four to five years. The fund's volatility is low. Capital preservation is as important to him as income growth.