The CF Miton UK Multi Cap Income fund, managed by Martin Turner and Gervais Williams, took the number one spot in the fund list with a return of £2,173.53 over five years.
Despite its comparatively weak performance during 2016/17 (a 7.7 per cent return over the past 12 months puts it in the bottom quartile of performers across the sector as a whole), the managers have secured higher and more consistent returns than the rest of the sector over five years.
This is owed in part to its focus on stocks from across the market cap spectrum. In the years prior to 2016, small caps were able to combine strong growth rates with healthy dividend payouts. Last year’s shift in market returns, which saw large caps start to outperform, may explain why the fund has struggled in relative terms since then.
The fund’s long-term record recently saw it overtake the Troy Trojan Income fund in the Sanlam Private Wealth Income Study ‘White List’, with the latter having previously held the top position. But the Troy fund, run by Francis Brooke, did top another recent equity income study produced by Hargreaves Lansdown. The platform found that the Troy fund was the best over the past decade for combining capital growth with income production.
It should be noted that some of the most well known UK equity income names – such as Mark Barnett and Mr Woodford – take a total return approach. Despite its name, UK equity income is not solely about payouts – an overriding focus on income risks sacrificing growth.
Top holdings
According to Sanlam’s White List, the Miton fund has another quality in its favour: a comparably low volatility. Launched in 2011, its top five holdings span a range of different companies: Burford Capital (2 per cent); Stobart Group Ltd (1.8 per cent); BHP Billiton plc (1.5 per cent); IG Design Group plc (1.5 per cent) and Park Group (1.4 per cent).
Despite not matching pace with peers over the past 12 months, its top holdings indicate the potential returns on offer from smaller companies. Legal finance firm Burford Capital’s share price has risen 255 per cent over the past year alone.
At the other end of the size spectrum, BHP Billiton has risen 75 per cent over the same period as a result of a turnaround in its fortunes. Crucially, both firms have also announced dividend increases over this period.
Smaller companies are also a focus of the top-performing investment trust over the past half-decade, the Chelverton Small Companies Dividend Trust. Managed by David Horner, managing director of Chelverton Asset Management, and David Taylor, who has 30 years’ worth of experience in fund management, the fund made a total return of £3,038 on £1,000 over five years, which is considerably higher than the £1,989.95 average across the top-10 funds in the sector.
