Outlook improves for UK equity income funds

Graham Ashby believes UK equity income is set for an investor renaissance over the next decade, despite underperformance from the sector in recent years.

Ashby, head of UK equities at LV=Asset Management and manager of its UK Equity Income fund, acknowledges equity income funds have come under the microscope in recent years primarily due to an overexposure to banks and life assurance companies, many of which cut dividends. However, the manager remains convinced the reinvestment of dividends is the best form of long-term wealth creation. “An ideal investment is one which provides a decent yield but also grows its dividend at the same time, and the outlook for dividends looks a lot better than it has done for some time,” he says. “The...