A fully flexible way to invest
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Equity income investing gives investors a way to invest in the UK stock market and receive dividend income from the companies owned by the fund. This can be useful to some investors but some of the largest dividend paying companies in the UK can be found in sectors that damage the environment or the health and well-being of their customers.
Who's it for? All investors
‘A bird in the hand is worth two in the bush’ is a well-known phrase, apparently dating back over 2,500 years. It’s as relevant today is it was then, and particularly when it comes to investing.
When you invest in a company’s shares, you own a stake in that company’s future. In return for your money, the company agrees to share in its successes and failures.
You are rewarded by – hopefully – a rising share price over time. But your gains and losses are only ever ‘on paper’. You will need to sell your shares at a profit to benefit from your investment decision unless that company pays you a dividend.
A company can pay a cash dividend to its investors in return for owning its shares. In doing so, they are giving investors something tangible, and the choice to spend the cash as they wish. You may regard a bird – or a dividend – in your bank account to be worth more to you than two birds on paper whose value rise and fall over time with the wider stock market.
Traditionally, equity income funds offers investors the potential to receive an income and benefit from share price growth from the portfolio of companies held by the fund. The UK is known as a market that pays a higher level of income out to its investors than many other of the world’s major stock markets. But it’s important to consider what type of company you might own within an equity income fund.
In recent years, the UK companies that pay the highest dividends are found within industries such as tobacco, oil and gas, and gambling. These companies have become unpopular with some investors because of the environmental or social problems their activities cause. It’s possible to find funds that don’t invest in these sectors or shares, but they may pay a lower level of income to investors as a result.
The Barclays UK Equity Income Fund uses two underlying managers. These two managers think about investing in a slightly different but complementary way.
Jupiter wants to own companies that are valued very cheaply and are able to pay a dividend to their shareholders. It owns UK shares of all sizes but currently finds the best combination of value and dividend yield being offered by the UK’s largest shares.
On the other hand, Abrdn believes that the best returns are made by companies that can grow the dividend they pay to investors. In its opinion, this shows the companies they own manage their finances well. In time, this will be valued by investors in the form of a rising share price. In many cases, they invest in the shares of the UK’s medium and smaller sized businesses, across a wide range of sectors.
The Barclays UK Equity Income Fund blends these two approaches. No investment approach will be successful all the time, however, so this fund combines two different approaches. It aims to provide good long-term returns by smoothing out the performance peaks and troughs that can occur with one particular style of investing. Owners of the fund can choose to receive the income it pays out twice a year as cash, or have it invested back into the fund. As always, investors should be willing and able to own this fund for at least five years.
The Barclays UK Equity Income Fund is one of 13 Multi-Manager funds on the Barclays Funds List. Find out more information about the multi-manager funds as well as other funds that invest in bonds. Find out more information on these funds.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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