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Standard Life UK Equity Income Unconstrained Fund research update

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

Thomas Moore, manager of the Standard Life UK Equity Income Unconstrained Fund, is part of a new generation of fund managers. His objective is to find companies with the potential to grow earnings, but where growth has not been reflected in the share price. He focuses on quality companies which he feels are able to maintain dividends even during periods of uncertainty.

Fund manager outlook

As the economy continues to recover and a rise in interest rates looms, Thomas Moore is cautious on stocks which have been purchased by investors seeking an alternative income stream to cash, including companies in sectors such as healthcare. As interest rates rise, he expects cautious investors to move back to holding cash, selling these investments and causing share prices to fall. Conversely, with rising wages supporting consumer expenditure, the manager is positive on the outlook for companies focused on the UK customer.

Recent purchases / sales


  • Ibstock, the UK's largest brick maker: the outlook for the UK brick market is strong, in the manager's view. New houses are planned to address the housing shortage which should continue to support demand for building materials. He expects brick prices to remain stable as it is difficult for capacity to markedly increase. He purchased the stock at its initial public offering (IPO) in October 2015.
  • Equiniti, the payment services provider: forever evolving regulatory, tax and compliance changes could support demand for the company's services in future, in the manager's view. For example, their pension service which allows employers to manage their employees' benefits and retirement savings could benefit from the introduction of the workplace pension. The company also benefits from recurring revenues as many of the services it provides are sought year after year by their customers.


  • Barclays: the company continues to struggle with regulatory cost, fines and litigation. Thomas Moore has lost his conviction in the bank and he disposed of the investment following disappointing results, which placed pressure on future dividend growth.
  • Playtech, provider of gambling software: the stock has contributed positively to the fund's returns due to the success of their business-to-business gambling software. The manager sold the investment as they recently looked to move into business-consumer activities where they have less experience.

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Thomas Moore assumed management of the fund in January 2009. Over his tenure, the fund has risen 210.6%* compared with 107.1% for the IA UK Equity Income sector, which can be attributed to a combination of strong stock selection and shrewd sector positioning, according to our analysis. A large exposure to small and medium-sized companies has also aided performance as these companies have outperformed their larger counterparts over the period. Past performance is not a guide to future returns.

Recent performance was positively impacted by exposure to BT and DFS. The former reported better than expected results and strong growth as consumers opted to upgrade to more expensive media packages. DFS, a relatively new investment, also announced positive results in addition to committing to a significantly higher dividend than previously indicated.

Performance of the Standard Life UK Equity Income Unconstrained Fund over manager's tenure

Performance graph

Source: Lipper IM to 02.11.2015

Annual percentage growth
Nov 10 -
Nov 11
Nov 11 -
Nov 12
Nov 12 -
Nov 13
Nov 13 -
Nov 14
Nov 14 -
Nov 15
Standard Life UK Equity Income Unconstrained 0.69% 15.92% 42.62% 4.91% 14.09%
IA UK Equity Income -1.26% 13.04% 25.23% 1.83% 7.66%

Past performance is not a guide to future returns. *Source Lipper IM to 02/11/2015.

Our view on this fund

The UK Equity Income sector is extremely competitive and home to many talented managers. Thomas Moore has the backing of an experienced, well-resourced UK team at Standard Life and we believe the fund has the ability to produce good long-term returns. However, we currently feel there are other equity income funds run by more experienced managers which are better value and in which we have higher conviction. This fund therefore does not currently feature on the Wealth 150 list of our favoured funds across the major sectors.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

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.

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