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Fund research

Artemis Income: December 2023 fund update

In this fund update, Senior Investment Analyst Joseph Hill shares our analysis on the manager, process, culture, ESG integration, cost and performance of the Artemis Income fund.

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment, and pension rules may have changed since then.

  • The fund is managed by an experienced trio, including one of the UK’s most experienced income investors Adrian Frost

  • The managers invest in companies they think can pay a stable and sustainable income through the market cycle, regardless of the economic backdrop

  • The fund features as one of our five funds to watch for 2024

  • The fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The managers of Artemis Income mainly invest in large UK companies, with some holdings in medium-sized and overseas companies when they find great opportunities. They look for companies they believe will deliver a sustainable income, though there are no guarantees. We view this as a more conventional UK equity income fund that could work well alongside other asset classes in an income focused portfolio.


Artemis Income is managed by the experienced trio of Adrian Frost, Nick Shenton and Andy Marsh. Frost is an industry stalwart and has been managing this fund since 2002. He was joined by Shenton in 2012, and Marsh made up the trio in 2018. They have seven decades of investment experience between them and have developed a strong working partnership at Artemis. They have been investing through good times and bad and we think they’re one of the best teams in the business.


The managers aim to outperform the FTSE All-Share over the long term, while providing a growing income and a dividend yield above what’s offered by the index. This means the management trio look for businesses they believe can pay a stable and sustainable level of income, through the market cycle, regardless of the economic backdrop. The team says there is a ‘competition for capital’ in the portfolio, and only their best ideas make it into the fund. They seek companies with reoccurring revenues which they believe will still have consumers, profits, and therefore dividends, in the future, regardless of disruption – although nothing is guaranteed.

The managers spend a lot of time assessing company management and think their ability to allocate capital efficiently is vital to making a success of the business. They aim to have a portfolio of between 50 and 70 companies with diversified cash flows.

They currently invest in 45 businesses, most of which are larger companies. Around 28% of the fund is invested in companies in the Consumer Discretionary sector, with a similar amount invested in financials. The managers make use of their ability to invest up to 20% of the portfolio into businesses listed outside of the UK. There’s currently around 10% of the fund invested abroad.

In recent months, the managers have made some changes to the fund’s investments. This included a new investment in the shares of Lloyds Bank, with the managers positive on the prospects for the bank’s earnings and shareholder returns through a combination of dividends and share buybacks. On the other hand, they sold the fund’s investment in fellow bank, Nordea on the basis that it was fully valued. The managers have also continued to trim the fund’s position in private equity company 3i following its period of strong performance.


Artemis provides an attractive environment for fund managers, allowing them the freedom to run money how they see fit without imposing a ‘house view’ on them. It’s also a collegiate atmosphere, with managers supporting and challenging each other. The managers of the fund are partners in the business. We think this structure is a good thing for investors, as both managers and the firm are focused on the long term and can run funds without distractions from short-term shareholder demands. They are rewarded from the profits of the business, based on their long-term fund performance and payment of the profit share can be deferred over several years.

ESG integration

Investment teams at Artemis are encouraged to think for themselves and invest according to their own style, so approaches to ESG (Environmental, Social and Governance) integration across the firm vary. Recent meetings with the Artemis teams we back on the Wealth Shortlist suggest ESG is an important factor.

Artemis has a firm-wide policy to support the aims of international conventions on cluster munitions and antipersonnel mines and therefore the firm will not knowingly invest in companies which produce these weapons. The firm also provides helpful ‘responsible investing stamps’ next to each of its funds, which help investors see, at a glance, which forms of responsible investment are incorporated in each fund.

Artemis votes on all their holdings, unless restricted from doing so, and fund managers engage with firms to develop their understanding, raise issues with management and monitor subsequent developments. The firm provides engagement case studies, and other information about its engagement and voting efforts, in an annual Stewardship report. Artemis also provides a monthly voting summary which includes rationales for votes against management and abstentions. Stewardship activity is carried out in line with the firm’s comprehensive voting and engagement policies.


The fund has an annual ongoing charge of 0.80%. Investors using the HL platform will benefit from a discount of 0.21%, to pay 0.59%. The saving is achieved through a loyalty bonus which may be taxable if the fund is held outside of an ISA or SIPP. The HL platform charge of up to 0.45% a year also applies.


The fund has significantly outperformed the broader FTSE All-Share Index since Adrian Frost took over as manager in 2002. Over the last 10 years, the fund has also done well and outperformed for investors. Over this period, it has delivered returns of 75.81%*, ahead of the FTSE All Share’s 63.84% return.

Over the last 12 months to the end of November 2023, the fund has delivered returns of 2.91%. This was ahead of both the FTSE All Share index, and the IA UK Equity Income peer group average, which delivered returns of 1.79% and 1.45% respectively over the same period. Past performance isn't a guide to future returns.

We normally expect the fund to lag a rising market but to hold up better when markets are falling. Our analysis suggests that the fund’s investments in private equity company 3i and retailer Next have been among its better performers over the year.

The managers are optimistic about the outlook from here, with lots of companies held in the fund buying back their own shares, as well as paying dividends which they feel adds to the prospects for investor returns. This is on top of the attractive valuations across the UK market when compared to international peers.

At the time of writing, the fund yields 4.03%. Income isn’t guaranteed, and yields aren’t a reliable indicator of future income. The fund takes charges from capital, which can increase the yield but reduce the potential for capital growth.

Annual percentage growth

Nov 18 - Nov 19

Nov 19 - Nov 20

Nov 20 - Nov 21

Nov 21 - Nov 22

Nov 22 - Nov 23

Artemis Income






FTSE All Share






IA UK Equity Income






Past performance isn't a guide to future returns.
Source: *Lipper IM to 30/11/2023.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.
Written by
Joseph Hill
Joseph Hill
Senior Investment Analyst

Joseph is part of our Fund Research team. Having joined HL in 2017 initially on a graduate scheme, he's now integral to our analysts who select funds for our Wealth Shortlist. He also analyses the UK Growth, UK Equity Income and UK Smaller Companies fund sectors, providing expert insight for our clients.

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Article history
Published: 27th December 2023