AXA Framlington Monthly Income and Equity Income - fund merger
Heather Ferguson | Fri 24 April 2015
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The AXA Framlington Equity Income Fund will be merged into the AXA Framlington Monthly Income Fund with effect from 25 April 2015. George Luckraft has managed both funds since September 2002 and will continue to manage the consolidated fund.
With new pension freedoms, and interest rates at historic lows, investors are increasingly demanding more frequent income from their investments. The two funds have a large degree of overlap in terms of investment focus and strategy. As such, the manager feels the AXA Framlington Monthly Income Fund, which pays a monthly income, is a more attractive alternative to the Equity Income Fund which distributes income twice a year. In addition, as both funds are relatively small, AXA anticipates the merger leading to greater economies of scale and lower charges.
Whereas many UK Equity Income managers focus on large, high-yielding companies, George Luckraft tends to invest significantly in smaller companies. Over the past five years, both the Equity Income and Monthly Income Funds have had around two thirds invested in small and medium-sized companies. This weighting to higher-risk small and medium-sized firms has positively impacted returns when this area has performed well but when these companies suffer, as they have done since September 2014, the fund has struggled.
Our view on the manager
George Luckraft's long-term track record is uninspiring. Since he assumed responsibility for the funds in September 2002, they have both underperformed the FTSE All Share Index and the peer group. Our analysis suggests the manager's stock selection has been disappointing for a number of years. We would like to see a significant improvement in performance, driven by stock selection, before considering the AXA Framlington Monthly Income Fund for inclusion on the Wealth 150 list of our favourite funds across the major sectors. Please note this should not be taken as a signal to make any changes to a portfolio, providing it continues to meet its objectives.
Please note the fund’s charges can be taken from capital, which can increase the yield but reduce the potential for capital growth
Find out more about this fund including how to invest
Please read the key features/key investor information document in addition to the information above.