UK income funds cling to familiar names

Some 51% of income in the UK market comes from just 10 companies, and 68% comes from 20 companies. Most UK equity managers cluster around these familiar names, meaning the make-up of many UK equity funds is very similar.

If you were to pick at random one of the top 10 most popular stocks in the peer group, on average, eight out of 10 income fund managers would own it. Why is there such a high level of commonality in the sector? One might hope it is because eight out of 10 managers think these are among the best income investment opportunities in the UK stock market, and as such, deserve a place in their funds. This seems like an extraordinarily consensual view towards the biggest stocks in the index. Do eight out of 10 fund managers really believe they can add value in the analysis of these mega cap...