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The fund’s objective is to achieve a growing income level as well as capital growth – target yield is at least 10% above the UK stockmarket. The bulk of the portfolio is made up of large and mid-sized UK companies, but managers Adrian Frost and Adrian Gosden also take advantage of the freedom to invest up to 20% overseas. Stock selection is mainly bottom-up with a focus on companies’ free cash flow, but the managers also take account of the economic environment in their analysis.
|Sector||UK Equity Income|
|Dividends paid||30 Jun, 31 Dec|
|Standard initial charge||0.00%|
|Initial charge via Bestinvest||0.00%|
|Additional bid/offer spread||0.00%|
|Annual management charge||0.75%|
|Ongoing charges figure||0.80%|
Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Information Investor Document, which we make available to you before you make a decision to invest, alternatively it is available on request.
This is a core fund for equity income investors managed by two experienced investors, who are also able to draw upon the experience of the wider Artemis investment team. The fund's success has led to a higher level of assets under management, meaning there is now a greater focus on larger companies at the expense of small and mid-cap stocks. As a result returns have moderated in recent years, but this also makes the fund a more cautious option in the peer group. As with many income funds this typically provides a degree of protection from falling markets, but it can lag fast rising markets.
|High yield bonds||0|
The fund invests predominantly in FTSE 100 and to a lesser extent FTSE 250 UK equities. The managers will also invest up to 20% in non-UK equities. Exposure to small caps is minimal. The investment process is split 70/30 between stock specific drivers and macro-economic factors. The predominant valuation measure used is a company’s free cash flow yield – its profits per share after tax, interest and capital expenditure. This measure is generally reflected in its dividends and dividend growth. Attractive companies are subjected to fundamental analysis, which may include company meetings and use of the Artemis in-house quantitative tool SmartGARP. This analysis is used to assess the direction, volatility and sustainability of the cashflow, and whether company management will allocate capital wisely. Portfolio companies are weighted according to valuation, security of cashflow/yield and growth in cashflow/yield.
|Fund data updated on||16/08/19|
|High yield bonds||0|
As at: 31/05/2019
5.3238%3i Group Plc Ord
4.2268%Royal Dutch Shell
2.972%Legal & General Group
2.7115%Secure Income Reit Plc Ord 10p Reg S
|Oil & Gas Exploration & Production||10%|
60-100 holdings. Corporate bonds (up to 10%) may be held where they prove a more attractive alternative to the underlying equity.
Max 5% in one stock. Max 15% in one sector. Max 20% overseas holdings, typically in Europe.
There are some limits placed on the portfolio but these could result in significant divergences from the benchmark from time to time.
|Average monthly relative returns||Bestinvest MRI|
|14/15||15/16||16/17||17/18||18/19||3 years||5 years||Career||3 years||5 years||Career|
|Performance figures are based on the average of monthly percentage returns relative to the benchmark index.|
Born in 1957 and a graduate in Geography from Cambridge University, Frost started his career at stockbrokers Hedderwick, moving to Andrew Weir in 1980. He joined Morgan Grenfell (later Deutsche Asset Management) in 1982 and managed the Deutsche UK Equity Income fund from October 1989. He became a director in 1990 and head of UK equities in 1996. After taking a break from fund management in 2001 he joined Artemis toward the end of that year, where he has specialised in managing UK equity income funds. He is a partner of Artemis. Adrian Gosden works with Adrian Frost on the income funds. He started his investment career with Andersen Consulting, later working at Fleming Investment Management and Société Générale Asset Management before joining the Artemis UK team in 2003.
Adrian Frost has 30.5 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.09%. During the worst period of relative performance (from February 2009 - December 2010) there was a decline of 20% relative to the index. The worst absolute loss has been 36%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.
|Periods of worst performance|
|Absolute||-36% (May 2007 - March 2009)|
|Relative||-20% (February 2009 - December 2010)|
Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.