The past year has been dominated by discussions around how to generate yield in a low-growth and low-rates market. While the questions centred on how bond managers were responding to such demands, equity income investors were not immune to these concerns.
Over the past year, the average manager in the 78-strong European arm of the equity income sector returned 8.1%. Even the strongest outperformers only just managed to reach double digits.
But as we know from talking to fund selectors, consistency is more highly prized than short-term stellar performance. So who has stayed ahead of their counterparts over the past five years?
When we expand the numbers to cover the period between December 2012 and December 2017, there is a total of 49 eligible managers, with the average manager having returned 52.6% in absolute terms. For the purposes of comparison, the MSCI Europe High Dividend Yield TR rose 61.6% in euro terms.
Looking at those managers who were able to outperform most consistently, there are three fund managers who have beaten the average manager return in each 12-month period dating back to 2012. So what has driven these dividend specialists to this elite status?
Tobias Klein and Sebastian Müller, First Private
Five-year total return (December 2012-December 2017): 101.9%
Best year of outperformance vs. average: +13.29% in 2012/13
The First Private duo of Tobias Klein and Sebastian Müller, who are both Citywire + rated, make up two-thirds of our top three for the past five years. They are also the top performers in absolute terms, having returned more than 100%.
Klein has been on the Germany-domiciled fund since its launch in 1997, while Müller was added in November 2011 as a replacement for Martin Brückner. They operate with a strong domestic bias, which includes a 30.9% allocation to Germany and 28% to France. At a sector level, financials account for almost a quarter of the fund's exposure.
Victoria Leggett, UBP
Five-year total return (December 2012-December 2017): 74.1%
Best year of outperformance vs. average: +12.73% in 2012/13
Victoria Leggett's performance figures are drawn from her time in the sector as a whole, which includes five years on the now-defunct UBAM Actions Euro Rendement fund. The European equity income specialist is consistently above the average manager and sits fifth in the rankings for her absolute numbers.
Leggett currently runs the UBAM Euro Equity Income fund, which she co-manages with Scott Meech. Meech is not recognised here due to his track record on other funds in this sector. The main emphasis in this fund is financials, with a sizeable overweight, while Germany is the biggest country bet at 28% of the fund’s assets.