Are Australia’s equity income funds up to scratch?
The Australian equity income sector has sat in the bottom quartile of its equity sector peer group for the ten years, five years, three years, one year and six months to 30 June this year, data from FE Analytics shows.
The sector returned 5.26 per cent for the year to 30 June, placing it in last place behind the ACS Equity – Europe sector, which returned 8.67 per cent, and the ACS Equity – Asia Pacific Single Country sector, which returned 9.89 per cent.
To put this in perspective, the top quartile sectors, Australian Small/Mid Caps, North American equities and Asia Pacific ex Japan returned 20.40 per cent, 19.35 per cent and 14.80 per cent respectively.
The chart below shows the performance of the equity sectors for the year to 30 June.
Sixteen funds in the sector outperformed the sector average in that year, but that has increased over the last six months to 17 and three months to 20.
The sector might be improving, though, as although it placed in the bottom quartile for the six months to 30 June, it shot up to the second quartile over the three months to 30 June and the top quartile for the month to the same date.
The top fund in the sector for the year to 30 June was an ETF, the ETFS S&P/ASX 300 High Yield Plus ETF fund, which returned 15.47 per cent.
The Lincoln Australian Income fund was in second position, with returns of 14.555 per cent, and the Armytage Australian Equity Income fund placed third with returns of 13.30 per cent.
Colonial First State, Nikko Asset Management, BetaShares and AMP Capital also had funds in the top quartile.
Betashares’ Australian Dividend Harvester fund placed last for that period with -4.78 per cent returns.
The chart below shows the performance of the top five funds relative to the Australian equity income sector for 30 June 2017 to 30 June 2018.
While every fund in the sector was correlated to some degree, the Microequities High Income Value Cap fund has remained lowly or negatively correlated, yet sat in the bottom quartile for the year to 30 June.
AUTHOR
Anastasia Santoreneos
Recommended for you
The $673 billion global investment manager has appointed a former Zenith sales head as it seeks to expand its reach in the Australian wealth management market.
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.
