Unicorn UK Income is not the highest-yielding UK equity income fun, but over one, three and five years it has made some of the best total returns. This may be because the fund is biased to smaller companies, while its aim is to deliver both sustainable dividends and growth through a diversified portfolio. Equity income funds tend to focus on large-caps with good dividends but a lower growth profile, in defensive areas of the market.
Despite its small-cap bias,Unicorn UK Income still currently offers one of the best yields out of the 100-plus funds in its sector, currently more than 5 per cent, which places it in the top quartile on this measure also.
Smaller companies, in particular those listed on the Alternative Investment Market (Aim) and which can be included in the portfolio, carry greater risk than large capitalisation companies. "The investor [in these] must have experience with volatile products," says Unicorn Asset Management. "The investor must be able to accept significant temporary losses, thus the fund is suitable for investors who can afford to put aside the capital for five years."
The fund may also be less cost-efficient as it is very small - only £4.2m in size - so will not be able to achieve the economies of scale a larger fund could, though this does enable it to invest in smaller companies. Its maximum initial charge of 5.5 per cent is more expensive than many funds which typically have charges of 5 per cent or lower.
The fund's management team is led by investment manager John McClure, who has specialised in investing in UK smaller companies for over 20 years.
Full data PDF factsheet for Unicorn UK Income can be found here.
