Professional only
What level of yield should an equity income fund be forced to pay?
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
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.
