Important - The value of investments can fall as well as rise, so you could get back less than you invest, especially over the short term. The information shown is not personal advice, if you are unsure of the suitability of an investment for your circumstances please contact us for personal advice. Once held in a SIPP money is not usually accessible until age 55 (rising to 57 in 2028).
2016 has been quite a year. Back in March, the most controversial thing to have happened was the suggestion a £200 million polar research ship be named “Boaty McBoatface”. Ultimately, the public vote was overruled and the ship will be named “RRS Sir David Attenborough”.
The voting public did get their way in other, more important, matters though both here and abroad. Britain voted to leave the European Union, the US elected Donald Trump as president, and Italians overwhelmingly rejected constitutional reforms, resulting in their prime minister’s resignation.
Stock markets have, by and large, shrugged off these events and delivered good returns. This hasn’t stopped many investors remaining cautious and sitting on the sidelines with large amounts of cash, however. We feel this could be a mistake and our outlook for 2017 is positive.
With cash and bonds offering little in the way of income, the stock market continues to deliver the potential for higher income and capital growth. The UK economy is in reasonable shape, inflation is relatively low, and we can’t see interest rates rising any time soon. We think any dips in the stock market should be seen as a buying opportunity and expect funds offering attractive variable yields to remain popular. Beyond the UK, there are markets overseas offering exciting growth potential for the more adventurous investor.
Below are five areas we believe could thrive in 2017 and exceptional funds we feel investors should consider. While we expect these themes to perform well next year, it is important to remember investments should be considered for the long term and they will fall as well as rise in value, so you could get back less than you invest.
One of our favourite UK-focused equity income funds is Artemis Income, managed by the experienced Adrian Frost. He invests in high-yielding businesses – companies with robust sales and strong cash flows which should help them maintain dividends over the long term. These contribute significantly to the fund’s attractive 4.2% yield (variable, not a reliable indicator of future income) and include recognised brands such as GlaxoSmithKline, AstraZeneca and Imperial Brands. The fund can also invest in higher risk, high yield bonds.
We rate Adrian Frost and the Artemis UK Equity Income Team highly. They have significant experience managing equity income funds and a long history of strong performance. Anyone who invested £10,000 in the fund ten years ago and took the income would have received over £4,200 back purely in income. What's more, those reinvesting the income in this time would have an investment worth nearly £19,000. Please note that past performance is not a guide to the future.
We believe this fund could be a great long-term holding within an equity income portfolio.
|Annual % growth||Nov 11-12||Nov 12-13||Nov 13-14||Nov 14-15||Nov 15-16|
|IA UK Equity Income||14.4||23.6||5.1||5.8||4.5|
Past performance is not a guide to future returns