News - Investment
Categories: Investment
Topics: Uk equity income | Dividends
A third of UK Equity Income funds slashed distributions to investors in 2011, despite a bumper year for UK-listed companies which saw dividend payouts hit an all-time high of £67.8bn.
A report by independent financial adviser Dennehy Weller & Co (DWC) into one of the country's most popular investment sectors claims 34% of UK equity income funds cut their payouts.
Threadneedle's UK Equity Alpha Income fund reduced payouts by the most, with Leigh Harrison and Richard Colwell's £240m fund cutting its dividend by 12.7%. The fund paid out 0.967p in dividends per unit.
On average the sector increased payouts by 4.82%, with ten of the 101 funds managing to grow payouts by more than 10%.
The £85m Axa Framlington Monthly Income fund, managed by George Luckraft, increased its payout by the most, upping it by 32.7%. The fund paid out 2.25p per unit.
Brian Dennehy, managing director at DWC, said last year's marked bounce in the total dividends distributed to UK company shareholders brings into focus the poor payouts in the IMA UK Equity Income sector.
"The main reason behind the dismal payout growth is some managers still juggle stocks with a total return priority, instead of prioritizing payouts," said Dennehy.
"The equity income sector remains split between true income-focused funds and those who target total return, whether they openly admit it or not. Investors need to be clear which they are buying."
The top nine funds which cut dividends
| Fund Name | 2011 Payout Change % | 2011 Total Return % |
| Threadneedle UK Equity Alpha Income | -12.7% | 1.4% |
| SWIP UK Income | -9.5% | -6.6% |
| Premier Income | -9% | 1.6% |
| F&C UK Growth & Income (since merged with UK Equity Income) | -8.7% | -3.8% |
| Threadneedle UK Equity Income | -7.1% | 0.4% |
| Cazenove UK Equity Income | -6.5% | 1% |
| Henderson UK Strategic Income
|
-3.8% | -6.9% |
| Newton Higher Income | -3.3% | 0.1% |
| Insight Equity High Income | -2.2% | -5% |
The top nine funds which increased dividends
| Fund Name | 2011 Payout Growth % | 2011 Total Return % |
| AXA Framlington Monthly Income | 32.7% | -7.5% |
| Walker Crips Equity Income | 27% | -1.5% |
| Aberdeen UK Equity Income | 22.1% | 0.7% |
| F&C Equity Income | 16.6% | -3.9% |
| JOHCM Equity Income | 13.5% | -4.4% |
| Jupiter Income | 12.8% | -0.2% |
| JPM UK Higher Income | 12.5% | -3.9% |
| SWIP Multi Manager UK Equity Income | 11.8% | -0.6% |
| Schroder Income | 11.1% | -8.3% |
Source: Dennehy Weller & Co
Categories: Investment
Topics: Uk equity income | Dividends
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