UK Equity Income fund focused on finding asset-light companies with cash generative economics and long-term growth potential, that also offer an attractive initial yield and a growing dividend stream. These types of companies tend to be better insulated during the market downturns. It will always be at least 80% invested in the shares of high-quality UK-based companies, but with revenues generated from a well-diversified range of geographies. With the valuations of many UK listed companies at attractive levels the opportunity set is as broad today as it was at launch in 2009.
"I like all the companies we own to contribute to returns and for the power of economic compounding to do the heavy lifting of generating dividend growth and capital appreciation."
Hugh YarrowPortfolio Manager
Aims to deliver capital growth and a rising income stream from a portfolio of UK equities
Focus on companies with high returns on capital, a strong economic moat and pricing power
Disciplined long-term approach, supported by a collaborative investment team shared across all the Evenlode strategies
Hugh has been a manager of Evenlode Income since launch in October 2009. Previously he managed several equity income funds at Rathbone UTM.
IMC
15 years
22 years
Ben has worked on Evenlode Income since launch in 2009, and has been a manager of the Evenlode Global Income Funds since launch in 2017.
CFA (Level 1), IMC
15 years
16 years
Chris joined Evenlode Investment Management in February 2018 having previously been an equity research analyst at Investec Bank and Berenberg.
Qualified Chartered Accountant and Chartered Financial Analyst
6 years
21 years
During March, global stock markets continued to move higher – animal spirits have risen significantly over recent months as investors have become increasingly confident in the trajectory of the global (and most importantly US) economy, with ‘soft landing’ or ‘no landing’ scenarios increasingly consensual. Though risks from more elevated interest rate levels and geopolitical uncertainty remain, these concerns weren’t a focal point for investors during the month.
Evenlode Income rose +0.6% in the month compared to a rise of +4.8% for the FTSE All-Share and +3.9% for the IA UK All Companies sector. There were two main reasons for this underperformance. First, and most significant, was the ‘risk on’ flavour of the market. The fund’s lack of exposure to more asset-intensive business models was a drag. These areas of the market (energy, mining, banks etc.) make up a large part of the FTSE All-Share and led the market higher. Conversely more stable, repeat-purchase business models – which always make up the bedrock of the portfolio - generally posted more pedestrian or negative returns, as investor sentiment on the global economy remained upbeat. The second factor was the -10% fall in Reckitt Benckiser shares during March (which subtracted -0.6% from the fund’s performance) as fears emerged around US litigation involving its infant nutrition business Mead Johnson. We think the lost market value – though understandable - significantly outweighs a realistic worse-case value to settle the cases.
The most positive contributors to return during the month were Savills, Howden Joinery and Intertek. Savills reported full year 2023 results and management highlighted an improvement in market conditions in the final quarter of the year. Howden Joinery reported better than expected full year 2023 results on the last trading day in February and noted an encouraging start to 2024. Intertek released good full year 2023 results with particularly strong profit growth.
There were no major changes to the portfolio, but we continue to trim back holdings such as Sage, Microsoft, RELX and Wolters Kluwer where share price performance has been strong in recent months, and add to a range of other portfolio holdings.
The aggregate fundamentals for the portfolio have continued to progress in a reassuring manner. Organic revenue growth for 2023 averaged +6%, with organic operating profit growth a little above this rate*. Looking ahead, the outlook for profitability continues to improve as input cost inflation falls back to more normal levels. The valuation environment is looking attractive to us and is about as good as it has been at any time over the last decade, other than during the Covid sell-off in 2020.
*Source: Evenlode, Visible Alpha
1RELX | 8.4 |
2Diageo | 7.8 |
3Unilever | 7.8 |
4Reckitt | 5.5 |
5Bunzl | 4.6 |
6Experian | 4.1 |
7Smiths Group | 3.3 |
8Intertek Group | 3.2 |
9GSK | 3.0 |
10SGS | 3.0 |
11Smith & Nephew | 2.9 |
12Howden Joinery Group | 2.9 |
13Compass | 2.7 |
14London Stock Exchange Group | 2.6 |
15Spectris | 2.5 |
16Roche | 2.4 |
17Sage Group | 2.4 |
18Savills | 2.3 |
19Games Workshop | 2.1 |
20Hays | 2.0 |
Industrials | 38.2 | |
Consumer Staples | 23.8 | |
Information Technology | 8.4 | |
Health Care | 8.3 | |
Financials | 8.1 | |
Consumer Discretionary | 7.5 | |
Real Estate | 2.3 | |
Communication Services | 1.6 | |
Materials | 1.2 | |
Cash | 0.7 |
United Kingdom | 87.1 | |
Europe | 7.9 | |
North America | 4.4 | |
Cash | 0.7 |
Comparator Benchmark | FTSE All-Share |
IA Sector | IA UK All Companies |
Morningstar category | EAA Fund UK Equity Income |
Launch date | 19 October 2009 |
Fund type | UK Domiciled OEIC |
Base currency | GBP |
Dividend frequency | Quarterly |
Active share | 76.1% |
Country of registration | UK |
The investment objective of IFSL Evenlode Income is to provide income and capital growth over Rolling Periods of 5 years, with an emphasis on income.
We use cookies - the analytical kind, sadly not edible - to help personalise content, track visits to
our
website, and optimise your experience.
By continuing to browse the site you are agreeing to our
cookie
policy.