UK Medium Risk
Medium risk
This is split between the equity income funds and growth funds, including smaller companies. Of the nine funds, six were positive over the 6 months to June 2010. The top performer was M&G Smaller Company fund. Again surprisingly good, despite growing economic pressures, sharply outperforming the smaller company index, down 3% over the period. The manager is still uncovering value. Hang on.
The selection of equity income funds includes a range of approaches, and taking a long view you shouldn’t go too far wrong with any of them. However, while earlier in the year we made the point that companies with high and sustainable incomes (in which these funds invest) should be bought, there are now bigger considerations which arguably outweigh the income attractions in the short term.
A number of big risks are coming into focus, in particular those derived from unsustainable sovereign debt. So although we persistently highlight the importance of dividend income in driving long term stock market returns, in the short term the downside risk to the capital value is more of a concern.
So limit your exposure to these income funds for now.
It’s a similar story for the growth funds, Newton UK Opps, Artemis UK Special Situations, and M&G Recovery. All fine funds, these are just not ideal conditions in which to be committing new money.
| Company and Fund |
Rating
|
Risk
|
Sector |
| Newton Higher Income |
Bronze
|
7.9
|
UK Equity Income
|
| Artemis Income |
Bronze
|
8.3
|
UK Equity Income
|
| Jupiter Income |
None
|
8.5
|
UK Equity Income
|
| Standard Life UK Equity High Income |
Bronze
|
9.7
|
UK Equity Income
|
| JOHCM UK Equity Income |
Silver
|
10.6
|
UK Equity Income
|
| M&G Recovery |
Silver
|
9.8
|
UK All
|
| Newton UK Opportunities |
Silver
|
7.4
|
UK All
|
| Artemis UK Special Situations |
Bronze
|
8.7
|
UK All
|
| M&G Smaller Companies |
Bronze
|
12.3
|
UK Smaller
|