The Problem with UK Equity Income

Funds run by Rathbones, Invesco Perpetual, Schroder and Henderson have all been kicked out the IA UK Equity Income sector - why is the sector dwindling?

External Writer 12 May, 2016 | 3:53PM

Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Tineke Frikkee, manager of the Smith & Williamson UK Equity Income Fund, asks should the Investment Association change its 110% dividend yield hurdle for the UK Equity Income sector?

The constraints imposed by the Investment Association (IA) on UK equity income funds – specifically the one that states that such funds must generate a yield of 110% of the FTSE All-Share’s yield – have become a very hot topic in recent weeks. The debate has become such a big issue that it has been front page news in some trade publications and has also been picked up by the personal finance sections of the national press.

Dividend cuts tend to come in cycles and skilled fund managers should be able to avoid them

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