Is it time to take profits in UK equity income?

EQUITY INCOME

Concerns over a bubble in the equity income sector have spurred some multi-managers to review their strategies. Katie Holliday evaluates whether now is the time to take profits in this area.

The recent strong performance of UK equity income funds and so-called “expensive defensives” has led some multi-managers to review their exposure to the sector. According to Morningstar data to 19 October, performance of IMA-listed UK Equity Income vehicles has surged in recent years, making a collective return of 27.2% over the past three years and 13.4% over one year. This is in contrast to weaker longer term returns of 4.4% over five years. Meanwhile, UK defensive stocks, which form the bedrock of UK equity income funds have reached extreme valuations. Investors continue to pile in...