Volatile and extreme market conditions, which have affected the returns of many UK income funds, hav...
Volatile and extreme market conditions, which have affected the returns of many UK income funds, have resulted in six changes in the 12 recommended income funds in Principal Premier's White List Income Study for July.
The changes in the White List, designed to take into account both dividend streams and capital growth and gives greater weight to recent performance, are a result of the 1999/2000 difficulties experienced by many UK income funds. The funds included in the White List, which was first published in 1976 and is a recommended guide to Principal Premier's clientele, include ABN Amro Equity Income, Newton Higher Income, BWD UK Equity Income and Deutsche UK Equity, Rathbone Income & Growth Inc, Premier Dividend, Clerical Medical Equity High Inc, Gartmore UK Growth & Income, Credit Suisse Income Retail, Norwich UK Equity Income, Liontrust first Income Growth and Invesco GT UK Income & Growth.
Of those only ABN Amro Equity Income, Deutsche UK Equity, Premier Dividend, Credit Suisse Income Retail, Norwich UK Equity Income, and Invesco GT UK Income & Growth achieved positive growth in the year from 1 July 1999 to 1 July 2000.
Nick Hollings, director at Principal Premier, said: "The combination of volatility, dot.com mania and lower dividend yields conspired to create one of the worst years for UK Equity Income funds that we ca remember. A measure of this year is that only 11 funds within the UK Equity Income sector of 78 funds were able to avoid a negative total return in the 12 months to 1 July 2000."
He said that ABN Amro Equity Income led the field by a long way with 47% growth, but that it was a result of the fund's barbell approach to investing.
Hollings said: "The new entrants have tended to favour the barbell approach. This rather inelegant description simply means that the manager creates within his portfolio a combination of high yielding stocks and so-called growth stocks."
The Black List, which details the worst 12 UK income funds according to Principle Premier, contains Scottish Equitable UK Equity Inc A, Martin Currie Income, Baring Equity Income, Barclays Combined Inc and Murray Blue Chip. Also included are Henderson UK Equity Inc, Aberdeen High Income, Baillie Gifford Income A, Abbey Dividend & Growth, Lincoln Income, Abbey High Income Equity, and Sovereign Income.
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