Artemis Income
Silver-rated Artemis Income has a well-executed process and capable management team, making it a solid offering for investors seeking core exposure to UK equities with an above-market dividend yield and growing income stream.
The strategy benefits from a highly experienced management team, consisting of Adrian Frost, Nick Shenton and Andy Marsh, that has consistently applied a sensible, tried-and-tested approach. Frost is committed for the next few years but has made clear his intention to step back in due course, with Shenton and Marsh the successors. As time has passed, our conviction in the newer managers has increased, and there is equal say.
The strategy is managed as a core mandate and, with its considerable size, does not have the flexibility to invest significantly down the market-cap scale, unlike many peers. When constructing a portfolio, the managers aim to maintain a good level of diversification with regards to cash flow and dividend streams. They invest in 40-70 names, keeping an eye on the benchmark (although they are not constrained by it). The strategy aims to outperform the FTSE All-Share benchmark over the long term while providing a growing income and a dividend yield at a premium to that of the index.
FTF Martin Currie UK Equity Income
The Silver-rated FTF Martin Currie UK Equity Income fund is managed by Ben Russon, who took over from Colin Morton following his retirement at the end of 2022. The two managers had been working together since 2013 and in 2020 Russon was promoted to co-lead manager of the fund. He has also been the lead manager on the UK Opportunities product, which uses very similar process and shares high commonality in core holdings (above 70%). The transition has been well planned and executed, and the resource has been gradually strengthened with the addition of Will Bradwell in 2018 and Jo Rands in 2021.
The strategy’s approach remains the same: a blend of top-down analysis of the economy and stock market dynamics with a valuation-aware approach to stock selection. The team focuses on large companies with strong and growing free cash flows, durable superior competitive positions in their industries, strong balance sheets, and attractive dividend yields and/or dividend growth. This is a core, benchmark-aware approach; as such, it aims to add value in a steady, incremental manner to build a strong cumulative record over the longer term. The strategy can underperform in strong market runs or when small caps rally, but its long-term performance profile is solid and typically boosted by its ability to protect capital relatively well in trickier market environments.
Man GLG Income
Man GLG Income, which holds the Morningstar Medalist rating of Bronze, has been managed by veteran investor Henry Dixon since November 2013. This strategy targets the same types of stock as Undervalued Assets, seeking to identify two types of stock: those trading below their estimate of the company's asset value and those where the company's profit stream is being undervalued relative to the cost of capital, with the additional caveat here of a yield of at least that of the market. It also targets another type of opportunity: companies with net cash balance sheets and strong free cash flows, which can lead to positive dividend surprises. Additionally, the allocation to stocks lower down the market-cap scale differentiates this strategy from many of its equity-income peers. Our conviction stems from Dixon's demonstrated ability to consistently execute the investment process with discipline.
Performance has been strong, with the strategy outperforming the FTSE All Share index and Morningstar UK Equity Income category average over the last five and 10 years, albeit with higher volatility than the index and peers.
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