Equity income funds

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Equity Income funds are collections of shares which pay good dividends. So as well as having skin in the investment game, you are also getting some income along the way. A decent equity income fund at the moment should pay between about 3-4%.

This piece in the Times from Hargreaves Lansdown’s Mark Dampier gives real insight into why equity income funds can be so useful and are worth holding well beyond retirement age. See our take on it on our funds learning path.

Here are some perennial picks on the fund selectors’ lists

Artemis Income remains possibly the most consistent favourite of the fund selectors I chat to; they point to the manager’s superior stock-picking skills and a strong emphasis on cash generation. Current yield is 3.9%.

Another favoured pick is CF Woodford Equity Income fund, managed by fund management superstar Neil Woodford, which currently yields 3.4%. If you want a multi-cap approach then look at the Standard Life UK Equity Income Unconstrained fund at 3.8% or Marlborough Multi-Cap Income fund with a chunky 4.8%.

M&G Optimal Income can divide opinion but remains popular with many. It’s run on a total return basis, which means the manager has more flexibility than most and can use bonds, derivatives and shares.

Looking overseas and Newton Global Income fund sits on many platforms’ preferred lists. This fund’s yield is 2.85%. JP Morgan Emerging Markets Income currently has a yield of around 4.6% and is a riskier long-term income play in what is a rather unloved sector right now. 

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