IA lowers yield hurdle for UK Equity Income sector

The Investment Association has announced the conclusion of its UK Equity Income sector review.
9 March 2017


Ryan Hughes, head of fund selection at AJ Bell, comments:

“The move by the Investment Association to lower the yield hurdle to 100% of the index seems to make sense and tackles the problem of funds falling out of the Equity Income sector when their yield temporarily drops.

“This new approach gives funds the clear choice as to whether they sit in the UK All Companies sector or the UK Equity Income sector, while still providing clear parameters around the level of yield that needs to be achieved. This revised approach should provide clarity to investors when making peer group comparisons and avoid the strange situation of funds moving sectors for reasons outside of their control.

“Bringing the Global Equity Income sector into line with this approach also sets a clear standard as to how fund groups want to categorise themselves if they are pursuing income generating strategies.”

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