fund
JO Hambro CM UK Equity Income Y
Multicap UK equity income fund with a strict yield discipline.
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115.00p
Price (Inc)
These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.
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145.20p
Price (Acc)
These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?
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0.00%
Initial chargeSome funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!
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0.63%
Annual management charge
This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).
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0.66%
Ongoing charges
This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.
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5.40%
Yield
How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…
This fund targets an above average yield and some capital growth from a multi-cap portfolio of UK equities. The investment process, which incorporates a strict yield requirement for portfolio holdings, was developed by fund managers James Lowen and Clive Beagles at previous employers Newton. Stock selection also incorporates long-term investment trends identified by the managers - these are used to focus research. The portfolio typically has a value bias.
Fund summary
| Sector | UK Equity Income |
| Structure | OEIC |
| Launched | January, 2013 |
| Size | £1,808m |
| Yield | 5.40% |
| Charging basis | Capital |
| Dividends paid | 28 Feb, 31 May, 31 Aug, 30 Nov |
Charges
| Standard initial charge | 0.00% |
| Initial charge via Bestinvest | 0.00% |
| Additional bid/offer spread | 0.00% |
| Annual management charge | 0.63% |
| Ongoing charges figure | 0.66% |
Allocation
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Investment process
All stocks in the portfolio must have a higher prospective yield than the FTSE All-Share, which reduces the investment universe to around 120-140 FTSE 350 companies and 80+ small cap stocks. The managers make their own dividend forecasts, so they can invest in non-yielding stocks they believe will introduce dividends. The managers build the portfolio using a primarily bottom-up approach, favouring companies with strong cash and dividend flows. Stock turnover is relatively low (around 50%pa) - any stock whose yield falls below that of the index will be sold; the managers may also sell companies yielding more than the index if other valuation measures become stretched. The process also includes themes - long term trends such as the mobile internet - identified by the managers to focus research. Portfolio construction is also mainly bottom-up and sector weights can diverge substantially from the index, though the managers sometimes include stocks in sectors they do not like in order to reduce underweights.
Beagles and Lowen each have more than 20 years’ experience and have worked together for more than a decade, during which time they have generated fairly consistent outperformance. This is partly due to a higher weighting to mid and small-cap companies than the peer group, which often looks at just a limited number of large cap dividend payers. The fund’s success has resulted in an increase in assets under management, which may make it more difficult to access smaller companies, providing a headwind to future performance. The fund has also typically been more volatile than the benchmark and peer group, and can struggle when its value style is out of favour.
Manager research
Average monthly relative returns
- 16/17 0.07%
- 17/18 0.29%
- 18/19 -0.42%
- 19/20 0.07%
- 20/21 -0.53%
Bestinvest MRI
- 3 years -0.29%
- 5 years -0.10%
- Career 0.19%
- 3 years 32.60%
- 5 years 44.40%
- Career 96.10%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.
James Lowen / Clive Beagles
Lowen started his career in 1994 at KPMG, qualifying as a Chartered Accountant before moving to Newton in 1998 as a member of the Research Department. He became an Investment Director, a member of the UK Policy Group (responsible for setting UK equity strategy) and the investment committee before moving to JO Hambro in September 2004. Lowen holds a first class Economics degree from Exeter University and is an associate member of the Institute of Investment Management and Research. Beagles graduated in 1989 with a degree in Economics from Nottingham University and began his investment career at Commercial Union in the UK Equity team. After 7 years at CU, culminating in the management of their pooled pension fund, he joined Newton in September 1996 as a Regional Specialist, UK Equities. He ultimately became Head of UK Equities and chaired the UK Equity Policy group, before joining JO Hambro in September 2004.
Track record
James Lowen / Clive Beagles has 12.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.19%. During the worst period of relative performance (from April 2018 - September 2020) there was a decline of 25% 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 96%.
Periods of worst performance
| Absolute | -37.00% (May 2018 - March 2020) |
| Relative | -25.00% (April 2018 - September 2020) |
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.
Allocation
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Top 10 holdings
Data accurate as at 31 July 2020
| 5.9314% | Bp |
| 4.39% | Tesco |
| 4.2369% | Rio Tinto |
| 4.2024% | Anglo American |
| 4.0358% | Glencore Plc |
| 3.89% | Legal & General Group |
| 3.8795% | Barclays |
| 3.8166% | Vodafone Group Plc |
| 3.395% | Phoenix Group Hldgs Plc |
| 3.3046% | Wpp Plc |
| Source: Trustnet |
Sector breakdown
| Financials | 32.00% |
| Consumer Services | 16.00% |
| Basic Materials | 15.00% |
| Industrials | 11.00% |
| Oil & Gas | 11.00% |
| Consumer Goods | 6.00% |
| Telecommunications | 4.00% |
| Money Market | 2.00% |
| Utilities | 1.00% |
Portfolio
50-70 stocks.
Constraints
Maximum position size 10% - there are no other stock limits, but stock overweights are unlikely to exceed 3%. There are no sector limits.