Terry Smith: 'The really bad news for equity income investors is yet to surface'

Slams IA yield requirements decision

The Investment Association (IA)’s decision to suspend its yield requirements for equity income funds is “bad news for equity income investors”, for whom the worst is yet to come, according to Fundsmith’s Terry Smith.

The IA said last week that it would not remove funds that did not meet the yield hurdles it sets for constituents of its UK and Global Equity Income sectors as it looks to guard against dividend cuts and cancellations caused by the coronavirus crisis. Funds in the IA's UK Equity Income sector must deliver a yield in excess of 90% of the yield on the FTSE All-Share every year, and exceed the yield on the index on a three-year rolling basis. Writing in the FT, Smith slammed the existing rules as rules "not… exactly stringent to begin with", noting that while the IA was "to some extent… ...