UK Equity Income Fund

Fund overview

The Fund seeks to achieve a combination of income and some capital growth. This core equity income Fund invests in high yielding UK stocks, with a particular emphasis on companies generating significant free cashflow to fund sustainable dividend payments. The Fund manager is a stock picker with a focus on high conviction stock ideas. The key measure of value is free cashflow yield on a prudently accounted basis.

Fund manager

Martin Cholwill joined RLAM in March 2005. Before joining RLAM, Martin spent 21 years working for AXA Investment Managers where he managed a variety of UK equity portfolios, including the UK Equity Insurance Funds (1993 – 1994), the General Trust (1994 – 1998) and the UK Growth Trust (1991 – 1996), concluding as a specialist UK equity income manager when he took over management of AXA’s UK Equity Income Fund in 1996. Martin has a degree in Maths from Durham University.

Investment approach

The approach taken in managing this core equity income fund is to identify good companies with strong business models and sound finances that are able to deliver sustainable dividend growth. The manager has a preference for companies with robust balance sheets yet whose shares are sufficiently out of favour so that they can be purchased on a dividend yield premium.

This high conviction Fund invests across a broad spectrum of industries in which the manager is able to identify value, in particular focusing on companies with attractive cashflow characteristics. This is important when identifying those companies that can consistently support a growing and sustainable dividend as it is cashflow, not ‘cashless’ profits, that pays the dividend and Funds investment for future growth.

Stock selection, based on thorough company research including meeting management teams, is the main driver of performance for the Fund. Macro economic factors are taken into account when considering company prospects. Martin would normally expect to hold between 40-60 stocks within the Fund.

Product Risk Warning

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. For funds that use derivatives, their use may be beneficial, however, they also involve specific risks. Derivatives may alter the economic exposure of a fund over time, causing it to deviate from the performance of the broader market.

Introductory video