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Investec UK Equity Income Fund

“Sustainable dividend growth, supported by cashflow”

Blake Hutchins – Portfolio Manager Investec UK Equity Income Fund

UK Equity Income Fund

The Investec UK Equity Income Fund aims to provide an attractive level of income by investing in cash generative, attractively valued, quality businesses, with low capital intensity. A conviction-driven UK equity income portfolio, it focuses on sustainable dividend growth.

Blake Hutchins

Blake Hutchins

Portfolio Manager

Why choose this fund?

Total return approach that combines income and capital growth.

Conviction driven UK equity income portfolio focused on sustainable dividend growth, not dividend yield.

Seeks steadily increasing annual income distributions.

Fund facts

Sector: IA UK Equity Income
Launch Date: 29 January 2015
OCF (I SHARES): 0.87%
Sedol: BV9G3J5
Risk/Reward Profile:

Quick links

Focus on dividend growth, not dividend yield

The Fund is focused on companies with sustainable dividend growth, rather than those with a high initial yield. We believe that companies with low capital intensity are in a better position to cover their dividends through cashflow.

Free cashflow cover of dividend (2018E)

Source: Citi Income Report, October 2017.

What makes us different?

    We believe that:

  • Dividends, and the compounding effect of reinvesting dividends, are a key component of real equity total returns.
  • Sustainable dividend growth, supported by cashflow, is more important than dividend yield.
  • Companies with sustainably high or improving returns on capital, strong free cashflow support, and low capital intensity, are those most likely to grow their dividends and deliver attractive real total returns.

Research framework

A Company Valuation Framework is at the core of the investment team’s research process. Success is based on the strength of three key factors — business model, financial model, and capital allocation — ultimately, however, valuation is key.

Source: Investec Asset Management.

Quality companies for growth and income

General risks

The value of investments, and any income generated from them, can fall as well as rise. Where charges are taken from capital, this may constrain future growth.

Past performance is not a reliable indicator of future results.

Investment objectives and performance targets may not necessarily be achieved, losses may be made.

Specific risks

Geographic / Sector: Investments may be primarily concentrated in specific countries, geographical regions and/or industry sectors. This may mean that the resulting value may decrease whilst portfolios more broadly invested might grow. Derivatives: The use of derivatives is not intended to increase the overall level of risk. However, the use of derivatives may still lead to large changes in value and includes the potential for large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss. Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. insolvency), the owners of their equity rank last in terms of any financial payment from that company.