UK Equity Income Rated Funds

Low interest rates and 'pension freedoms' have stoked demand for income from the stock market. Although interest rates in developed economies such as the UK have started to rise, they remain at historic lows, as do interest rates on cash savings products.

Equity income funds are ideally suited to those looking to draw an income from their investments, as well as growth-oriented investors cognisant of the powerful compounding effect of reinvesting dividends over time. Use of UK-focused funds mitigates the risk of adverse currency movements.

Equity income fund managers tend to invest in companies that pay out high and reliable dividends. The income yield on a stock is expressed as a percentage of its share price; the yield falls as the share price rises and vice versa.

Some strategies place their emphasis on companies paying a growing dividend that can keep pace with inflation; others seek a high absolute dividend. These are common themes among our core selection. Those that focus on smaller companies and balance income with more volatile capital growth, or have a high exposure to out-of-favour 'value' stocks, can be found among our 11 more adventurous choices.

Six selections, over one third of our cohort, are investment trusts that can use revenue reserves to smooth income payments from year to year. Average share price discounts to net asset values in the sector widened during 2017, potentially making 2018 a good entry point.

UK EQUITY INCOMEBrowse other rated fund groups
Fund & Sector
Rated Funds Group
1 Month Perf.
1 Year Perf.
3 Year Perf.
5 Year Perf.
Janus Henderson UKSmlCmp
UT UK Smaller Companies
View Factsheet
UK EQUITY INCOME4%
8 / 51
17.1%
20 / 49
46.8%
28 / 48
109.2%
25 / 47
Schroder Income
UT UK Equity Income
View Factsheet
UK EQUITY INCOME6%
4 / 100
16.7%
1 / 94
25.5%
6 / 85
68.5%
8 / 81
Man GLG UK Income
UT UK Equity Income
View Factsheet
UK EQUITY INCOME4.9%
15 / 100
16%
2 / 94
37.2%
2 / 85
85.5%
3 / 81
MI Chelverton UK Eq Inc
UT UK Equity Income
View Factsheet
UK EQUITY INCOME4.3%
36 / 100
11.7%
8 / 94
39.3%
1 / 85
93.3%
1 / 81
Montanaro UK Income
FO Equity - UK
View Factsheet
UK EQUITY INCOME3.2%
45 / 80
11.4%
13 / 78
35.2%
7 / 65
81.9%
3 / 50
Jupiter Income Trust
UT UK Equity Income
View Factsheet
UK EQUITY INCOME5.3%
9 / 100
8.5%
21 / 94
25.3%
7 / 85
60.9%
15 / 81
Lowland Investment Company
IT UK Equity Income
View Factsheet
UK EQUITY INCOME2.9%
12 / 24
7.9%
10 / 24
27.6%
7 / 24
51.5%
10 / 24
The Divrs Inc Tst PLC
IT UK Equity Income
View Factsheet
UK EQUITY INCOME-1.8%
23 / 24
6.8%
11 / 24
32.4%
4 / 24
79.9%
3 / 24
TB Evenlode Income
UT UK All Companies
View Factsheet
UK EQUITY INCOME1.8%
255 / 280
6.5%
186 / 274
32%
32 / 259
72.9%
46 / 244
AXA Framlington Mly Inc
UT UK Equity Income
View Factsheet
UK EQUITY INCOME2.4%
90 / 100
6%
39 / 94
25%
8 / 85
71.8%
6 / 81
Slater Income
UT UK Equity Income
View Factsheet
UK EQUITY INCOME2.7%
84 / 100
5.9%
42 / 94
19%
29 / 85
70.2%
7 / 81
The CtyofLdn IT
IT UK Equity Income
View Factsheet
UK EQUITY INCOME4.3%
7 / 24
5.6%
13 / 24
17%
14 / 24
49%
15 / 24
Tmpl Br IT PLC
IT UK Equity Income
View Factsheet
UK EQUITY INCOME4.7%
6 / 24
5.5%
14 / 24
18.5%
10 / 24
36.8%
19 / 24
Royal London UK Equity Inc
UT UK Equity Income
View Factsheet
UK EQUITY INCOME3.9%
47 / 100
5.4%
45 / 94
20.4%
20 / 85
67.8%
10 / 81
Premier Optimum Income
UT UK Equity Income
View Factsheet
UK EQUITY INCOME3.7%
55 / 100
3.2%
71 / 94
19.4%
25 / 85
61.1%
14 / 81
Franklin UK Rising Dividends
UT UK All Companies
View Factsheet
UK EQUITY INCOME3%
203 / 280
2.6%
248 / 274
21.8%
90 / 259
60.1%
81 / 244
Threadneedle UK Eq Inc
UT UK Equity Income
View Factsheet
UK EQUITY INCOME4.6%
24 / 100
2.3%
74 / 94
16.7%
45 / 85
58.8%
17 / 81
Rathbone Income
UT UK Equity Income
View Factsheet
UK EQUITY INCOME3.8%
51 / 100
-0.7%
80 / 94
14.5%
58 / 85
49.1%
46 / 81
Troy Income & Growth Trust plc
IT UK Equity Income
View Factsheet
UK EQUITY INCOME2.1%
17 / 24
-2.2%
21 / 24
15.3%
16 / 24
45.9%
16 / 24
Perp Inc & Gth IT plc
IT UK Equity Income
View Factsheet
UK EQUITY INCOME3.5%
9 / 24
-4.1%
23 / 24
-3.6%
24 / 24
29.6%
22 / 24
Data provided by
Reviewed 01 April 2018

Rated Funds Update: Rated Funds 2018

Review: first quarter of 2018

Investors in UK equities generally suffered a torrid quarter, with UK-listed shares among the worst performers on a global basis. The benchmark FTSE 100 index fell 7.2 per cent over the quarter, while the wider FTSE All-Share fared little better with a 6.9 per cent fall, as did the FTSE UK Dividend+ index.

While not making gains over the quarter, the vast majority of funds in the adventurous UK equity income group did far better than the indices. Notable outperformers were the small-company oriented Diverse Income trust, which fell by 0.7 per cent and fellow investment trust Lowland, down just 3 per cent. The value-oriented Schroder Income, a new entrant Rated Fund for 2018, fell by just 1.3 per cent.

However, fellow new entrant Premier Optimum Income had a very inauspicious start, falling 8.5 per cent. This suggests its options-writing strategy (which is designed to boost its yield, currently 7.6 per cent) has not worked well in the first quarter. That is particularly true when measured against the fund it replaced: Schroder Income Maximiser fell by just 1.2 per cent. Such a disappointing comparison leads us to place the fund under review.

Among the core UK equity income selections, TB Evenlode Income is being placed under review after the managers announced it will ‘soft-close’ the fund by applying a mandatory 5 per cent charge to new investments from May. That is a shame, as it is the best performing core fund in the group, having lost 3.4 per cent over the quarter.

Other funds in the core group marginally outperformed the benchmark indices over the quarter.

Funds under review: TB Evenlode Income and Premier Optimum Income

View a full list of our Rated Funds 2018 here