The Vanguard fund tracks the FTSE UK Equity Income Index. The concept is fairly simple - to give investors access to a broad range of dividend-paying securities from across the FTSE 350, while reducing the risk of being overly invested in a small number of high-yielding shares or particular industry sectors by limiting the percentage of the index invested in any one company or industry.
The Vanguard fund holds around 120 companies - the top ten holdings include all the usual suspects - Vodafone, Glaxo, Lloyd Bank, BP, BATS, National Grid etc.
Ongoing charges are 0.22% and also a one-off dilution levy of 0.40% on purchase. In addition, my broker AJ Bell levy an annual platform charge of 0.25% of the total value of the fund.
My initial purchase price in May 2015 was £177.50 - by last March it had risen to £181. However, it has retreated over the past couple of months and is back to just below my entry price, currently £174 and a total return of just 1.0% over the past year (incl. income).
By way of comparison, the total returns for some of my UK income trusts over the past year -
City of London 2.2%, Edinburgh -7.1%, Finsbury Growth & Income 10.6% and Temple Bar 2.5% (average 2.0%).
|3 Yr Comparison v HSBC Global Strategy|
(click to enlarge)
The fund has so far provided me with income payments of 776.92p in 2015, 775.65p in 2016 and a nice 10% increase to 857.87p in the past year - which gives a current yield of 4.8%. However, the income was inflated by the weak level of sterling in 2017 so I am expecting a reduction this coming year. Dividends are paid out half yearly in June and December.
It’s early days - just three years since purchase but I am happy to continue with the remaining holding of this income fund which seems to be doing the job required for my income portfolio.
As ever, this article is a record of my personal investment thoughts/decisions and is not a recommendation - as always, please DYOR.