UK Equity Income sector

The fund's managers are disciplined in seeking out companies they think can grow their cash flow, as that's what ultimately pays investors' dividends. They also keep the fund diversified to reduce the impact of any dividend cuts by a holding on the wider portfolio. Adrian Frost, Nick Shenton and Andy Marsh mainly invest in large UK companies, but they also invest in medium-sized and overseas companies if they think there's an excellent opportunity. Frost is one of the most experienced managers in the UK Equity Income sector, and we think he's built a talented team around him.

We think the managers' combined skill, discipline and experience puts them in a strong position to deliver healthy income and long-term growth, but there are no guarantees. The managers have the flexibility to invest into high yield bonds which if carried out can increase overall risk in the portfolio.

The fund managers look for companies which are market leaders with a competitive advantage and predictable cash flow. This tends to be a more concentrated fund, so each holding can have a significant impact on performance, both positively and negatively, and can therefore increase risk. Chris Murphy is an experienced income investor and has managed the fund since April 2009. He was joined by co-manager James Balfour in June 2016.

The managers target a higher income than the FTSE All Share, alongside capital growth over the long term. The core of the portfolio is invested in high-quality, cash-generative companies, but they also look at companies that are recovering or unloved by other investors. In addition, they invest in some higher-risk medium-sized and smaller companies.

Jupiter Income focuses on undervalued UK companies which could pay a dividend, so the fund can add diversification to an income portfolio. This style bias can mean the fund is out of favour through certain periods of the market cycle.

Ben Whitmore has managed funds for more than 20 years and is experienced when it comes to unearthing undervalued companies. He is assisted by Dermot Murphy. As well as the Jupiter Income fund, the two run Jupiter UK Special Situations and Jupiter Global Value Equity, using the same process and value bias. Whitmore invests in some overseas companies in this fund too, providing some diversification.

Whitmore and team have been steadfast in their value style through thick and thin. We think the fund would work well alongside other UK equity income funds with a different style bias to add diversification. Investors should be aware that this is a concentrated portfolio which can increase the volatility of returns and is higher risk.

The fund has a slightly different objective to other income funds. It aims to provide a rising income, but with lower volatility than the market and an emphasis on sheltering wealth in a falling market. This is a trait of Troy's range of funds and makes the fund a good diversifier compared to others in the sector.

The fund is managed by Blake Hutchins who is supported by Fergus McCorkell. They also have the support of Troy’s wider investment team of 14. The team work collaboratively, sharing a common approach to investment.

A key element of the approach is to avoid economically sensitive, less consistent businesses and those that require high levels of investment to keep going. There’s a greater focus on larger companies compared to some other income funds. The managers also invest up to 20% overseas where they find the best opportunities not available within the UK market. This is quite a concentrated fund and, while the team focuses on minimising losses, it can increase risk. They like high-quality, dependable companies that could do well even when the economy is weak, and some overseas companies that offer diversification to their UK stock selections.