Principal Investment Management has announced the addition of four UK equity income funds to its ‘Black List’ in the latest Principal Income Study.
 


Karen Robertson’s Standard Life UK Equity High Income fund has joined Principal’s 14-strong list of funds that have consistently underperformed.
 


The £86.1 million Ignis UK Equity Income fund run by Martin Brown, Stephen Message’s £48.4 million Old Mutual Equity Income fund and Henderson’s £79.1 million Global Care UK Income fund managed by George Latham also joined the Black List after delivering poor returns to investors.
 


Principal’s study, published twice a year, ranks funds based on seven different criteria, including performance, volatility and the income distributed, with the most recent period of performance given a greater weighting.
 


Funds that make it onto the White List are those that have a track record in delivering a rising level of income alongside long-term capital growth.
 


The ‘rapid descent’ of Robertson’s fund, which was on the White List a year ago, was highlighted in the report.
 


Principal said that Robertson had ‘found conditions tougher than most this year as economic sensitivity played a prominent role in the portfolio’. The study concluded that there are better options in the sector for investors ‘even if the outlook does turn towards her positive views on global growth’.
 


Star manager Robin Geffen’s £1 billion Neptune Income fund was demoted to the Grey List, having been a ‘long term stalwart’ of the White List.
 


Principal cited Geffen’s focus on global growth, which it felt was unlikely to be shared by investors in ‘these austere times’, and suggested that they look elsewhere for now.
 


Chris Ganney, investment manager at Principal, explained that with inflation still at elevated levels, the purchasing power of a savers income is falling year-on-year.
 

‘However, the main problems lie at the government-level, high quality companies with resilient business models are prospering, resulting in excess cash accruing on company balance sheets.
 

‘These companies are now returning larger amounts to investors in the form of dividends. Importantly, these payments are growing faster than inflation,’ he added.