Bestinvest says
George Luckraft pioneered a “barbell” approach to UK Equity Income investing in the 1990s, combining traditional high yielding equities with lower yielding growth stocks to target a yield of 110% of that of the FTSE All Share. However, this inclusion of the latter, often featuring illiquid small cap stocks, means the fund may prove from time to time to be extremely volatile, relative to the typical Equity Income fund. Therefore this fund should not be considered as a core fund for income.
The objective is to produce a higher than average yield combined with long term growth of income and capital. Investment is made principally in UK equities and convertible shares of companies which, in the manager's opinion, show above average profitability, management quality and growth.
The manager uses a "barbell" strategy which splits the portfolio into two parts:
- High quality stocks with attractive, sustainable yields;
- Equities with attractive growth characteristics but little or low yield.
This inclusion of the latter, often mid and small cap stocks, means the fund can still prove successful in a period where traditional 'value' stocks are out of favour. Weightings between the two styles are varied according to market conditions. Stock research is primarily bottom-up, using company meetings and traditional valuation analysis, but the manager also looks at macroeconomic factors that may affect the portfolio.