AXA IM eyes SMID-caps in equity income fund rebrand

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AXA IM eyes SMID-caps in equity income fund rebrand

AXA Investment Managers has rebranded its UK equity income fund, which will now access opportunities in a broader investment universe of smaller stocks.

The AXA Framlington UK Equity Income fund - formerly AXA Framlington Blue Chip Equity Income - can now invest in small- and mid-cap firms, targeting those with high sustainable barriers to entry within their industries.

In 2018, manager of the fund Simon Young co-founded Heartwood Partners, which set out to target small and mid-cap companies looking to improve their relations with their shareholder base. However, Young left the firm later in the year to join AXA IM.

Elsewhere AXA IM has formalised the fund's target of delivering a yield of distributable income in excess of 100% of the FTSE All Share on a rolling three-year basis and in excess of 90% on an annual basis. This will maintain its classification within the Investment Association's UK Equity Income sector.

The fund, which will continue to aim to produce higher than average long-term growth of income and capital, has an investment strategy targeting four themes; lowest cost providers in a given industry, high levels of intellectual property such as patents, high levels of repeat sales, and excellent distribution networks.

Young (pictured) said the fund is targeting firms that will "thrive whatever the circumstances", including those with "high barriers to entry which insulates them from competition and allow them to navigate challenging economic circumstances".

He added: "We believe these companies, allied to sound balance sheets and good cashflows will be able to grow their dividends ahead of inflation over the longer term."

Head of UK wholesale distribution at AXA IM Rob Bailey said: "The renaming of the fund to the AXA Framlington UK Equity Income fund allows Simon and the team greater flexibility to invest in the best equity income opportunities available across the full spectrum of UK listed companies."

The fund has returned 4.8%, 15.5% and 26.3% over one, three and five years respectively, according to FE. The IA UK Equity Income sector has averaged 0.8%, 14.5% and 29.1% over the same time periods.

This article was first published by Investment Week, a sister title to International Investment

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