Fund to watch: Jo Hambro Capital Management
The Jo Hambro Capital Management UK Equity Income fund is for investors looking for an attractive level of dividend income, coupled with the potential for long-term capital appreciation.
James Lowen and Clive Beagles, the two managers of the £1.1 billion fund, seek out companies among the 350 biggest businesses in the UK whose yields are above average.
Both Lowen and Beagles have a good track record and their fund has performed consistently well over the past five years. According to Morningstar data, over the past 12-month and three-year periods they have outperformed the sector average at 8.87% and 51.7% respectively.
Over five years, the average is between 24.84% and 19.67% higher than the average UK Equity Income fund. That puts them third on the leader boards out of the 98 funds in their IMA sector.
Look long term
Andy Gadd, head of research at Lighthouse Group, says: "The fund managers currently have a bias towards companies that are more sensitive to economic growth and they also have a significant weighting in smaller and medium-sized companies."
"This is a fund to purchase and tuck away for the long term, in the expectation that it will outperform when recovery materialises."
The fund has previously been soft-closed because of its popularity but it is currently accepting all new investors. It is mainly invested in financials, with a portfolio weighting of 34.2%, consumer services at 21.8% and oil and gas at 14.9%.
All investment returns are measured against a benchmark to represent “the market” and an investment that performs better than the benchmark is said to have outperformed the market. An active managed fund will seek to outperform a relevant index through superior selection of investments (unlike a tracker fund which can never outperform the market). Outperform is also an investment analyst’s recommendation, meaning that a specific share is expected to perform better than its peers in the market.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.