Standard Life Equity Income Tst (LON:SLET) aims to generate above-average income and real growth in capital and income from a portfolio of UK equities across the capitalisation spectrum. At end-December 2016, more than 55% of the portfolio was invested outside of the FTSE 100 index. While the last year has seen a tough period of relative investment performance as a result of outperformance of large-cap companies with overseas earnings, which were not held, SLET continues to have a good long-term track record; it has outperformed the benchmark FTSE All-Share index over both five and 10 years. With the exception of one year of static dividends, SLET’s annual dividend has increased every year since launch.
Investment strategy: Unconstrained vs benchmark
Manager Thomas Moore is able to draw on the wide resources of Standard Life (LON:SL) Investments’ UK equity team. He employs the firm’s Focus on Change philosophy, a proprietary screening matrix and thorough fundamental research to construct a relatively concentrated portfolio of 50-70 companies that are trading at a discount to their intrinsic value. Moore’s unconstrained approach means that stock and sector weightings vary significantly from the benchmark; at end-December 2016, more than one-third of the fund was invested in financial stocks. Gearing is permitted in a range of 5% net cash to 15% net gearing – net gearing is typically c 10%.