Funds that miss their yield target in the Equity Income sector have been much discussed. Groups that meet their yield criteria have long bemoaned other funds in the sector which, while they have produced high capital returns, have failed to comply with the Investment Management Association’s (IMA) set yield target.
According to various reports half the funds in the sector have failed to meet the objective of paying a dividend that is at least 110% of the yield of the FTSE All-Share Index. Consequently the Investment Management Association (IMA) today announced that from January 1, funds that fail to meet this aim will be expelled from the sector and placed into a new one: the IMA Equity Income and Growth sector. Among the half of funds that face expulsion are Neil Woodford’s £7.6 billion Invesco High Income and £5.4 billion Income funds.
Over the coming months more funds will be moved to the new sector. But today marks the end of a debate that has raged for at least a year.