Rathbone Income

Rathbone Income is a multi-cap UK equity income fund, which gives investors exposure to a concentrated portfolio of companies with high quality and visible earnings. The manager is unconstrained in terms of sector weightings and is able to fully express his market views with the portfolio positioning. The fund usually consists of between 40 and 50 holdings. It invests predominantly in UK equities (80% or more), while up to 20% of the total may be held in cash and overseas equities.

Our opinion

This is a solid core equity income fund run by an extremely experienced and long-standing manager. It has one of the best track records in the sector for raising dividends annually over a period of more than 20 years. Carl's process is well defined without being overly constrictive, and the heavy emphasis on risk management is particularly pleasing.

Fund manager

Carl Stick has managed the Rathbone Income fund since 2000. He is well supported by a large team of investment professionals. Carl graduated from the University of Southampton in 1991 and, following a couple of non-investment related jobs, he joined Rathbones in 1996. Carl is also a board director and plays a key role in Rathbones' investment process and business strategy. Alan Dobbie joined Rathbones in 2005 and became a co-manager on the fund in 2018.

Stick with the long-term dividend winners - ‘buy and hold’ for compound income and capital returns.

Carl StickFund manager

Investment process

Through investing in UK companies with above-average yields, Carl aims to deliver rising income with the opportunity for capital growth over time. The investment process uses ten core stock selection principles and revolves around three areas: risk management, quality and value. Company meetings and further qualitative research is then undertaken to build a portfolio of around 40 to 50 stocks. Carl's intention is always to own a stock for as long as it continues to fit the investment criteria.

ESG

ESG - Integrated
While the Rathbone Income fund is not classified as an ESG fund, ESG analysis is integrated into the process in order to fully assess the business, financial and price risks in any investment. The managers are free to invest in businesses that might otherwise be excluded if certain ESG exclusions were in place, such as the energy sector. They may retain a holding if it has a poor ESG score if they feel comfortable with the associated risks, and if those risks are priced into the investment. However, the managers would always prefer a business with lower ESG risks. If an ESG score is deteriorating they will investigate as a matter of urgency, as this reflects an increase in the overall risk profile of the business; conversely, an improvement in an ESG score is a positive. ESG scores on individual holdings in the fund are monitored on a weekly basis, and form part of their own internal analysis. They also use third-party ESG data providers, such as MSCI and Sustainalytics, and they will engage with companies if any controversies or issues are flagged.

Risk

Carl's focus on companies with high-quality earnings has resulted in this fund having a lower risk profile than the UK stock market. While there are no sector constraints, he controls single company risk by limiting position sizes.

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