Franklin UK Equity Income A

Large cap income fund with a focus upon quality businesses.

  • 242.18p Price (Inc)
  • 205.73p Price (Acc)
  • 4.50% 0.00% Initial charge
  • 1.50% Annual management charge
  • 1.59% Ongoing charges
  • 4.70% Yield

Prices as at 06 December 2019, fund data last updated 05 January 2016

The fund's aim is to achieve a rising income, with a dividend yield higher than the FTSE All-Share Index, together with appreciation of capital over the medium to long term. The fund provides exposure to quality, mostly large cap stocks with attractive valuations and pricing power. Fund manager Colin Morton blends a macro-economic overlay to the stock selection process and looks beyond short term news flow when evaluating a potential investment.

Fund summary

Sector UK Equity Income
Structure OEIC
Launched October, 2011
Size £772m
Yield 4.70%
Charging basis Capital
Dividends paid May, Nov

Charges

Standard initial charge 4.50%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.50%
Ongoing charges figure 1.59%

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Investment process

The process blends primary bottom-up factors with a macro overlay, with relative valuations guiding the extent to which positions are over or under weight. Research is conducted using both an internal proprietary valuation tool and external sell-side analysts' notes. The main focus is on quality businesses capable of generating a high return on capital and free cash-flow which in turn is available for distribution. Pricing power is deemed to be crucial. Inherently cyclical stocks are avoided. Morton is not stylistically biased but is driven by his relentless philosophy of not over-paying for stocks, which will lead him to invest in both value (cheap stocks in relation to their assets) and growth stocks (companies with fast growing earnings) whilst focusing beyond short term movements and news flow.

Benefiting from a longstanding manager in Colin Morton this is a large cap fund, which has typically displayed less risk (volatility) than the UK equity market as a whole. The portfolio can be considered as conservative for a fund that invests in equities. Morton has added value over his career, but we have higher conviction in other options in the sector.

Manager research

Average monthly relative returns

  • 14/15 0.59%
  • 15/16 0.31%
  • 16/17 -0.05%
  • 17/18 -0.25%
  • 18/19 0.33%

Bestinvest MRI

  • 3 years 0.01%
  • 5 years 0.19%
  • Career 0.11%
  • 3 years 62.90%
  • 5 years 94.50%
  • Career 99.80%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Colin Morton

Morton began his career in 1983 as a trainee stockbroker with Wise Speke & Co, before joining Rensburg in 1988, initially as a Private Client Executive and subsequently as an Investment Manager from 1991. He joined Franklin Templeton Investments when it acquired Rensburg Fund Management in January 2011. Morton holds an Investment Management Certificate (IMC) and is a Fellow of the Securities Institute (FSI).

Track record

Colin Morton has 19 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.11%. During the worst period of relative performance (from January 2009 - March 2010) there was a decline of 11% relative to the index. The worst absolute loss has been 37%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.

Periods of worst performance

Absolute -37.00% (September 2000 - January 2003)
Relative -11.00% (January 2009 - March 2010)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Top 10 holdings

Data accurate as at 31 August 2019

4.91% Bp
4.82% Royal Dutch Shell
4.18% Glaxosmithkline
3.57% Astrazeneca Plc
3.47% Unilever
2.74% Relx Plc
2.69% Imperial Brands Plc
2.66% Diageo
2.65% Hsbc Hldgs
2.6% British American Tobacco
Source: Trustnet

Sector breakdown

Financials 23.00%
Consumer Goods 18.00%
Industrials 13.00%
Consumer Services 11.00%
Oil & Gas 10.00%
Health Care 8.00%
Basic Materials 7.00%
Utilities 4.00%
Cash & Cash Equivalents 3.00%
Telecommunications 3.00%

Portfolio

The normal range of holdings within the portfolio is 50-100 stocks. A minimum of 70% of the portfolio will be held in the FTSE 100.

Constraints

Stock weights are limited to +/-3% versus the index, sectors to +/-5% and industry groupings to +/-10%.

Key Investor Information - Income

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Key Investor Information - Accumulation

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