Former ‘dog' fund transformed into a pedigree performer

With decisive action even the most disappointing ‘dog' funds can be transformed into pedigree performers says fund group F&C Investments.

To illustrate the point, F&C points to the remarkable performance turn around of the F&C UK Growth & Income Fund which next week clocks up a three-year anniversary under the tenure of managers Ted Scott and Hilary Aldridge.

Prior to Scott and Aldridge taking over the management of the fund in July 2005, the F&C UK Growth & Income Fund had languished at the very bottom of the three-year performance tables of the IMA UK Equity Income sector ranking in the 99th percentile. However, in the three years since Scott and Aldridge took charge it has rocketed to the top of the performance tables, ranking 12th of 82 funds since 1 July 2005. Over this period it has beaten some of the most popular choices for advisers in the sector including Artemis Income, AXA Framlington Equity Income, Jupiter Income and Rathbone Income. As savvy intermediaries have spotted a winner the F&C UK Growth & Income Fund has grown tenfold in size from just £14.6 million in July 2005 to £147.5 million today.

The recipe for successfully transforming the track record on the fund has been the application of a ‘bar bell' strategy of investing in both high yielding income stocks and lower yielding growth stocks, a formula which the fund managers had previously used to good effect on the award-winning Stewardship Income Fund, an ethical investment fund. This approach differs from traditional equity income funds which only target shares yielding more than the market and it provides the managers with greater flexibility for delivering total return.

Jason Hollands, Director, F&C Investments commented: "The UK Equity Income sector is arguably the champions' league of the UK retail market and we were determined to have a market-leading fund in the sector. Enabling investors to access Ted and Hilary's proven stock picking skills through an ‘invest anywhere' UK equity fund, without either ethical constraints or ‘must have' big index stocks, has delivered everything we hoped for from the fund."

"Ted and Hilary have clearly demonstrated they have been able to successfully pick high conviction stocks from sectors that are not available to them in the ethical funds. With the critical three-year record in place, we believe that the F&C UK Growth & Income Fund deserves increased attention from financial advisers, particularly as the fund is smaller and potentially more nimble than some of the more established competitors."