Income, with a value focus

Some of the best-known and most successful funds in the UK are equity income portfolios. However, this group contains a multitude of approaches.

We aim to maximise the total return of our portfolios via a combination of dividend income growth and capital gains. We are determined not to sacrifice capital in order to manufacture income.

Quality and valuation

By focusing on companies that pay dividends, we believe we effectively apply a quality filter and a valuation filter to the potential investment universe. Most often, it is only those companies that are long-established, profitable and well-governed that can consistently pay and grow dividends, over the long term.

Added to this, yield is a key valuation metric and one that can link quality enterprises to attractive multiples.

Research process

With our income bias helping to narrow the investment universe, we focus the majority of our resources on detailed bottom-up, fundamental analysis. Together with the broad equity team, we aim to understand the components and drivers of potential investment candidates. A priority is to meet the management of the underlying companies, which helps to determine an appropriate valuation for the complete business. Most importantly, the emphasis is on relative positioning versus the company’s peers.

Portfolio construction

Key elements of the portfolio construction process are:

  • Low turnover
  • No hard yield floor, which helps to avoid arbitrary and non-optimised trading
  • Gradualist buy/sell discipline

Strategy Investment style AUM(£M)* Average no. of holdings
Asian Income Valuation driven, total return strategy with a focus on providing income ahead of the market  900  76
UK Equity Income High conviction, concentrated strategy. All Cap with a focus on providing income ahead of the market 991 46
Europe ex-UK Income Valuation driven, concentrated total return strategy with a focus on providing income ahead of the market  458  51

*As at 28 February 2018

Income team

Find out more about the team that manages our Income strategy.

Income team