F&C takes 1st and 2nd place in UK Equity Income sector

F&C UK Growth & Income Fund and Stewardship Income Fund, both managed by Ted Scott, have taken first and second place respectively in the competitive IMA UK Equity Income sector over 12 months to date.

"The interesting thing is that these are very different funds," said Scott. "For the last six months we have increased the defensive content of F&C UK Growth & Income Fund taking profit in miners and moving into more defensive stocks such as BT our largest holding, and pharmaceuticals which have gone from a virtually zero position to account for some 8.5 per cent of the fund."

Scott said this was a good call, particularly in light of the recent market sell off which he believes could have quite a lot further to go.

"My view remains unchanged that the market is vulnerable to a correction and possibly a bear market," he added.

Scott said the capital growth in F&C UK Growth & Income had come from small and mid cap holdings which did well in the bull-run last year.

"Many of these stocks have defensive characteristics as well as strong earnings prospects despite the more difficult economic backdrop. This would not stop them falling heavily in a bear market but we would see an indiscriminate mark down as an opportunity to add to or start new holdings.

"Stewardship Income Fund, with its strict ethical restrictions, has had to get its income from large caps in the utilities sector where we built up our holdings in the first quarter of last year to some 23 per cent of the fund. The sector had a storming last six months in 2006, driven by M& A activity, namely the bid for Scottish Power, one of our largest holdings, the bid for water company AWG and the bid electricity provider Veridian. Our decision to add to our holding in Vodafone at £1.10 last August also proved timely as we watched the share price go up to around £1.45 by the end of 2006, peaking at just over £1.50 in February.

"The barbell approach also worked well for Stewardship Income which derived much of its capital growth from small and mid cap companies such as Doncaster-based Omega Kitchens and Lavendon Group, which supplies powered access equipment and has benefited from the recovery in the German construction market. Both companies are also held in F&C UK Growth & Income Fund," concluded Scott.

Scott has added to his corporate bond holdings in Stewardship Income in line with his more defensive approach and they now account for around 6.5 per cent of the portfolio.

A strong supporter of the F&C UK Growth & Income Fund is Mark Dampier, Head of Research at leading IFA firm Hargreaves Lansdown who commented: "Ted Scott has done a cracking job. Since taking over the F&C UK Growth & Income Fund in July 2005, Scott has turned this Fund around and propelled it into the top decile where it now challenges the biggest names in equity income."

Time is running out for ISA investors to benefit from the savings being offered by F&C UK Growth & Income Fund which end on 27 April 2007. The fund is slashing 2 per cent off its initial charge equating to £140 of extra investment on a £7,000 Individual Savings Account (ISA) investment. The special offer applies to both ISA and non-ISA investments and is also available for fund purchases via a range of major fund supermarkets including FundsNetwork and Cofunds.