Sanlam Private Investments (SPI) has reaffirmed its ‘sell' recommendation on Richard Wilmot's £2.1bn Newton Higher Income fund, arguing its recent overhaul has made the fund a less attractive option for income seekers.
In SPI’s latest White List Income Study, the fund’s change in strategy under Wilmot’s stewardship is described as a “disappointment”, owing to its new focus on smaller, dividend-paying UK equities.
Since taking over the popular fund from Tineke Frikkee last December, Wilmot (pictured) has widened its investment universe to include geographies outside the UK.
This was a move designed to improve performance, but it has also reduced the fund’s yield target.
Paul Surguy, author of the White List, said: “We noted the change of manager on Newton Higher Income in our last study. While the historical level of income has supported the fund this time, we expect that to fall away as the new manager adapts towards its more flexible remit.
“This disappoints us, with many investors having purchased the fund for a higher level of income, they should now look elsewhere.”
A number of well-known managers feature on SPI’s infamous Black List of funds it deems to have consistently generated sub-par performance over five years.
Neptune’s Robin Geffen, Standard Life Investments’ Karen Robertson, and Ignis’ Graham Ashby are listed in the bottom 14 funds by overall merit.
Meanwhile, SPI has added two funds to its White List, which calculates the best 14 funds in the sector over five years based on seven different criteria. These include performance, volatility and income distributed, with the most recent period of performance receiving a greater weighting.
Fidelity MoneyBuilder Dividend, run by Michael Clark, and Mark Barnett’s Invesco Perpetual UK Strategic Income have both been added at the expense of Thomas See’s Schroder Income Maximiser and Rathbone Blue Chip Income & Growth, managed by Julian Chillingworth, which have been relegated to the Grey List.
Both of Invesco Perpetual’s income offerings, managed by Neil Woodford, remain in the Grey List, defined by SPI as a temporary home for a manager with an out-of-favour style, or an early warning signal for a fund in decline.
Top of the White List is John McClure’s Unicorn UK Income fund, which has delivered net income of £25.40 over the past five years, based on an investment of £100.
“We note how Chris Hutchinson and John McClure’s difference in style from the majority of income investors has stood them in good stead,” said Surguy.
Clive Beagles and James Lowen’s JOHCM UK Equity Income fund is second, closely followed by RBS Equity Income in third.
Other high profile names in the White List include Cazenove’s Matt Hudson, Aviva Investors’ Chris Murphy, Threadneedle’s Leigh Harrison and Richard Colwell, and Artemis’ Adrian Frost and Adrian Gosden.
The Black List
The White List
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected