Rathbones to merge income funds

Rathbones Investment Management will wrap underperforming fund into larger Rathbone Income fund

Rathbones is merging its Blue Chip Income and Growth fund into the Rathbone Income fund, managed by Carl Stick. The underperforming fund will be wrapped into the larger mandate subject to approval from investors.

The Blue Chip fund, which has £71 million of assets under management, was launched in 1989 and has been managed by Alan Dobbie since January 2012. While it is a top-quartile performer over the past three months, it is in the bottom quartile of the UK equity income sector over one, three and five years.

The fund is down 3.8 per cent over the past year compared to an average return of 4.7 per cent in the sector. Over three years it has returned less than half the sector average at 10.4 per cent compared to 21.5 per cent.

Ben Yearsley, director at Shore Financial Planning, says: ‘This merger makes sense. Blue Chip Growth and Income is a small fund with a reasonable amount of overlap with the Income fund, and clearly most investors will choose Carl Stick as the established star of the team.’

Following the merger Dobbie will become co-manager of the £1.3 billion Rathbone Income fund, which has been run by Carl Stick since 2000. 

Rathbone Income has been a Money Observer Rated Fund since 2014 and we rate it a solid choice for investors seeking a growing income. 

Rathbones told investors that the merger is being undertaken because the two funds follow the same investment process and have broadly similar investment objectives. It adds that the Blue Chip Income and Growth fund has ‘failed to resonate with investors’ because there is too little differentiation between the two funds. 

Mike Webb, chief executive at Rathbones Investment Management, says: ‘Rathbones has always taken a pragmatic approach to its offering and regularly reviews its funds to ensure they meet the requirements of investors.’

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