There are numerous methods of seeking income, even if the surrounding income environment might not be as favourable as one might hope, so if you're looking for a fund to tap into one of these income streams, here's how to go about it on Morningstar.co.uk.
Morningstar's UK website offers data, commentary and research on equities, investment trusts, unit trusts and OEICs, and exchange-traded funds. To give you an idea of how to go about using our tools and Morningstar research, I've screened for the UK equity income funds that carry the highest Morningstar qualitative ratings.
Using the Fund Screener tool, I've selected among my search criteria:
UK ISA Funds—if I'm going to be receiving a healthy income from my investment I want to take advantage of a tax-efficient wrapper;
All Fund Companies—I want to view the whole offering;
Currency: GBP—I don't want to take on forex risk;
Broad Category: Equity—I want income from equity rather than bonds;
Morningstar Category: UK Large-Cap Value Equity—I believe I have enough exposure to small- and mid-cap equity in the U.K. so I want to focus on large caps.
I've also selected Inc distribution status as I want a fund that's going to pay out income rather than reinvest my dividends, and ensured that I'm searching only for non-institutional funds.
Finally, I want to know which funds that meet my criteria are the most highly regarded by Morningstar’s independent fund analysts, so I've also selected to be shown only those funds that have been awarded Gold and Silver Analyst Ratings.
I've left the other search criteria open as I can always return and narrow my search further, limiting the results according to their standard deviation or total expense ratios, for example.
Having refined my screening criteria, clicking 'Search' produces the below list, which I can then rank according to rating, performance, fees details, and various other metrics (by clicking on the relevant column). I can even read Morningstar analysts' independent reports on each fund if I subscribe to Morningstar Premium (test drive the service for free for 14 days here).
Artemis Income (Morningstar Analyst Rating: Gold)
Morningstar analysts believe this is an excellent choice for investors seeking income from their UK equity exposure. Premium members can read the full research here.
Invesco Perpetual Income and Invesco Perpetual High Income (Gold)
Morningstar analysts believe these funds are topnotch, but that they do have some limitations. That said, they think highly of manager Neil Woodford and his well-executed strategy. Premium members can read the full research here.
Investec UK Special Situations (Gold)
Although special-situations funds are usually considered to be riskier than traditional core holdings, Morningstar analysts believe this fund has enough breadth to be a core holding within a portfolio. Premium members can read the full research here.
Jupiter Income Trust (Gold)
Morningstar managers believe the vast experience of manager Anthony Nutt, coupled with a proven strategy, gives this fund a strong chance of continuing its outperformance over the long term. Premium members can read the full research here.
JOHCM UK Equity Income (Silver)
Morningstar says the strong management duo of Clive Beagles and James Lowen help make this fund a compelling choice for investors seeking income and capital growth. Premium members can read the full research here.
Search for funds meeting your own investment criteria by clicking here.