- A lower on-going charge of 0.67% p.a. for the Threadneedle UK Equity Income Fund (Vantage charge of 0.45% p.a. also applies)
- Threadneedle UK Equity Alpha Income removed from the Wealth 150
- We continue to have faith in Richard Colwell and the wider Threadneedle UK Equity Team to add value for investors over the long term
Change to the Wealth 150
The Threadneedle UK Equity Alpha Income and Threadneedle UK Equity Income funds aim to generate an attractive income for investors along with some capital growth. The former is designed to be a more concentrated and higher-risk income fund, capable of stronger long-term performance than the latter.
In reality, returns have been similar in recent years. Almost all the companies held in the UK Equity Alpha Income fund are included in UK Equity Income. Given the high degree of overlap we no longer feel it necessary to have both funds on the Wealth 150.
Past performance is not a guide to future returns. Source: Lipper IM to 31 December 2016
|Annual Percentage Growth|
| Dec 15 -
| Dec 14 -
| Dec 13 -
| Dec 12 -
| Dec 11 -
|Threadneedle UK Equity Alpha Income||14.05||2.77||6.38||28.53||18.52|
|Threadneedle UK Equity Income||13.78||4.45||6.58||29.41||16.26|
The Threadneedle UK Equity Income Fund, with a lower on-going charge of 0.67% p.a. (compared with 0.795% for the Alpha fund) continues to feature on the Wealth 150+ list of our favourite funds with low charges. The Threadneedle UK Equity Alpha Income Fund has been removed from the list. Please note that in addition to the fund manager’s annual charge, there is a platform charge of a maximum of 0.45% per annum to hold funds within a Vantage Account.
Richard Colwell is an experienced and capable manager with a pragmatic approach and a good long-term track record. Our analysis suggests he has added value in the past through correctly reading the economic environment in addition to positive stock selection. We are confident he will continue to add value for investors over the long term.
Richard Colwell aims to uncover 'hidden-gems' - unloved stocks or business that have been overlooked or have fallen out of favour with other investors. Over the past few years investors have shunned these types of business in favour of companies capable of stable growth and with more certainty over their earnings.
This situation has shown signs of reversal in recent months as Donald Trump’s victory in the US presidential race was taken as a positive sign for businesses linked to the health of the global economy. Richard Colwell feels his funds could benefit from some exposure to defensive, stable-growth businesses and will take advantage of share price weakness in this area to increase the funds’ exposure. However, the funds remain focused on undervalued, contrarian opportunities as he feels these stocks will outperform over the long-term.
Strong performance from the mining sector over the past 12 months has acted as a drag on the funds’ performance relative to the FTSE All Share Index as they have little exposure to this area. The manager is happy to maintain this positioning as he feels demand for commodities will wane over the coming year; he expects demand from China to reduce and feels the expectation of increased US demand, as a result of Trump’s policies, have been overestimated.
At present the Threadneedle UK Equity Income Fund has a historic yield of 3.78% and the UK Equity Alpha Income Fund yields 4.31%, although yields are not a reliable indicator of future income.
The funds charges are taken from capital which can increase the yield, but reduce the potential for capital growth.
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