Investec UK Equity Income I Inc 2
UK Equity Income
Update: 12 August 2019. Investec UK Equity Income placed under review.
Blake Hutchins is stepping down as manager of the Investec UK Equity Income fund to join Troy Asset Management. From October he will become co-manager of the Trojan Income Fund, alongside Francis Brooke. The Investec UK Equity Income fund will be managed by Ben Needham, who was the fund’s alternate manager. In light of this we will be keeping a close eye on performance and have placed the fund under review.
New for 2019. Backs capital-light businesses
The Investec UK Equity Income fund distinguishes itself from many of its competitors by favouring capital-light businesses. Blake Hutchins, its manager since launch in early 2015, focuses on cash-generative, attractively valued, quality businesses with low capital intensity and the ability to compound returns and cash flows over the long term, while returning a proportion of this growing cash flow back to investors in the form of rising dividends.
This means he avoids some of the UK’s biggest dividend payers such as HSBC, Royal Dutch Shell and BP. These tend to be capital-intensive businesses and none of them have grown their dividends in dollar terms over the past three years.
He typically favours two types of investment opportunities. First, quality compounders: capital-light businesses that have the ability to compound and grow their cash flows and, therefore, their dividends. An example of such a business – and a new holding for 2018 bought when it made its initial public offering – is IntegraFin, owner of the Transact investment platform.
Hutchins likes ‘positive change’ companies which are usually driven by an exceptional management team. An example of such a firm is Tesco, which he believes will be a ‘cash machine’ once chief executive Dave Lewis turns the supermarket group around.
The fund yields 3.7%. It focuses on sustainable dividend growth as opposed to absolute dividend yield. Hutchins takes a total return approach that combines income and capital growth and his portfolio has 30 to 50 holdings.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|Unilever PLC||7.21 %|
|Diageo PLC||5.88 %|
|RELX PLC||5.80 %|
|GlaxoSmithKline PLC||4.74 %|
|Reckitt Benckiser Group PLC||4.25 %|
|Sage Group (The) PLC||4.23 %|
|AJ Bell PLC||3.92 %|
|British American Tobacco PLC||3.77 %|
|Compass Group PLC||3.04 %|
|Informa PLC||2.80 %|
|United Kingdom||86.28 %|
|United States||7.07 %|
|Consumer Defensive||33.58 %|
|Consumer Cyclical||18.08 %|
|Financial Services||11.89 %|
Data provided by Morningstar.
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