What level of yield should an equity income fund be forced to pay?

Sam Slator 01/09/2016 in Income investing

The rules for fund inclusion in the Investment Association’s (IA) UK equity income sector are the most stringent of all categories: funds are required to produce a yield at least 10% higher than the UK stock market.

A significant number of funds have recently fallen foul of this mandate and have been excluded from the sector, prompting a review of the rules.

We wanted to see how FundCalibre visitors felt about the subject and our poll in August asked what they would prefer. More than 50%* of respondents prioritised simple transparency over the level of income produced. As long as they understood the aim of the fund and could make their own decisions, they didn’t think a specific yield target was necessary. 35%* believed an equity income fund should be achieve a higher yield than the market, whilst the remaining 14%* agreed with the IA’s current requirement of a yield at least 10% more.

*Results based on feedback from 73 FundCalibre visitors from 01/08/16 – 31/08/16

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