The Sanlam Income Study has earned a reputation as a definitive guide to performance and risk in the UK equity income sector.

Why equity income funds?

Investing in UK equity income funds can provide your clients with both a regular income and the potential for capital growth over the long term.

The funds have a common objective: to invest predominantly in the shares of UK-based companies with healthy balance sheets, robust and sustainable business models, and strong cash flows. These characteristics should enable companies to continue to pay attractive dividends to shareholders.

The UK has a strong dividend culture, supported by companies with a legacy of rewarding investors. Many UK businesses now derive a substantial proportion of their profits overseas.

By investing across a broad spectrum of industries, UK equity income funds can provide diversified exposure to the global economy. Many of the funds also have some flexibility to invest in a range of asset classes, helping to enhance returns and provide some protection against adverse market conditions.

Income yields have typically varied from around 3% to 6%, which is more than the current return on cash deposits with UK banks and building societies. Yet equity income funds differ from bank deposits in that the value of an investment may fall as well as rise and investors may not get back the original amount invested.

Many investors use equity income funds with the aim of generating capital growth over the longer term by reinvesting the income.

What is Sanlam’s Income Study?

Every six months, our exclusive research examines UK equity income sector funds with a market value of more than £20 million. We compare each fund using seven criteria, including:

  • Performance – absolute income generated over the past five calendar years;

  • Capital growth for each of the past five 12-month discrete periods; and

  • Volatility of capital over the past five years.

The results provide a quantitative assessment from which we compile our fund rankings, with the strongest funds constituting the White List as well as creating a Grey List and Black List to reflect the other funds.

The White List

The White List forms the basis of our investment recommendations for the White List ISA.
Your clients can invest in White List funds in two ways:

  • in individual funds through our execution-only service; or

  • in a portfolio of White list funds through our tax-efficient White List Portfolio ISA.

Investing in the White List Portfolio ISA is the simplest way to invest in the White List funds. This portfolio, which is actively managed by Sanlam, holds a selection of UK equity income funds highlighted on the White List.

Execution-only service

Do your clients like to stay in control of their investment decisions? If they want to make up their own mind about which UK equity income funds they think can provide the most attractive income stream, our execution-only service is ideal. 

The White List Portfolio ISA

Our White List Portfolio ISA provides a straightforward and tax-efficient way to invest in a portfolio of the best-performing UK equity income funds. We use our Income Study as the basis for selecting the funds that are held in the ISA.

The ISA is designed to provide long-term capital growth as well as an attractive income stream.

We review the composition on a regular basis to ensure that clients continue to invest in White list funds.

While our Income Study identifies funds that deliver consistent performance, and receives most of the plaudits, our Black List is equally significant. According to our analysis, funds on the Black List are the worst performers and have delivered the weakest returns.

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The value of investments and any income from them can fall and you may get back less than you invested.