Investment funds giving peace of mind
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Elite Rated Evenlode Income has become the latest fund to fall foul of the Investment Association yield requirements for the UK Equity Income sector.
The fund will move to the IA UK All Companies sector as of 1st June 2016 after narrowly missing the minimum target of producing an income 10% higher than the FTSE All Share index over three years.
Hugh Yarrow, co-manager of the fund, said that the “move has been purely driven by the fund narrowly missing a somewhat arbitrary sector classification definition” and stressed that neither the aims of the fund nor the investment process would change in any way.
Elite Rated Rathbone Income and Schroder Income have both met the same fate in recent months, which you can read more about here, and Evenlode Income is actually the 19th fund to exit the sector since 2013.
A consultation on possible changes to the UK Equity Income sector classification requirements was launched in April 2016 and the results are expected shortly.
FundCalibre’s managing director, Darius McDermott commented: “A review of the sector was long overdue and I hope some sensible changes are announced soon.
“Having a target is one thing, but I’m of the belief that managers shouldn’t be forced to buy certain companies or sectors just to achieve a certain level of yield. As long as the fund manager is transparent in their aims and process, I think investors should be allowed to choose whether they want a high yield or a growing yield.
“As with Rathbone Income and Schroder Income, Evenlode Income will retain its Elite Rating. We still regard it as a UK Equity Income fund and will continue to rate it as such, pending the outcome of the sector review.”