Premier Income Fund

31 March 2019 to 30 June 2019


Performance has been a challenge for value and income investors over the past few months (performance period: 31/03/19 to 30/06/19). Over the quarter, the fund was down by 2% compared with its comparator benchmarks, the IA UK Equity Income sector and the FTSE All-Share Index, which were up by 2% and 3.3% respectively.

The fund has returned 25.2% over the last five years to 30/06/19 compared with its comparator benchmarks, the IA UK Equity Income sector and the FTSE All-Share Index, which were up by 29.6% and 35.8% respectively.

The table below shows the discrete annual performance of the fund compared to its comparator benchmarks.









Premier Income Fund






IA UK Equity Income sector






FTSE All-Share Index






Many funds sold in the UK are grouped into sectors by the Investment Association (the trade body that represents UK investment managers), to facilitate comparison between funds with broadly similar characteristics. The fund is classified in the IA UK Equity Income sector, which we believe is a meaningful comparator to help investors assess the performance of the fund.

As the fund invests in UK companies, we believe that the FTSE All-Share Index, which is made up of many of the companies listed on the London Stock Exchange, is also a meaningful comparator to help investors assess performance.

Market review

Falling bond yields and the fear of an impending global recession have plagued sentiment over the past quarter.

Whilst the FTSE All-Share Index has been steady over the second quarter, we have seen a continued polarisation of the stockmarket with defensive growth type stocks outperforming UK domestic consumer cyclicals and financials. This has led to a further divergence of an already polarised market and many sectors look very cheap against historic norms.

Portfolio activity

Portfolio activity on the fund has been lower than usual over the past 12 months, however there have been opportunities to buy and sell companies whose valuation has looked especially cheap or expensive.

One of these companies was Daily Mail and General Trust where management has been trying to create value by slimming down their portfolio of media interests and focussing on fewer areas with the most potential. Whilst we believe the strategy is the right one, the shares have reached our target price and the dividend yield is no longer the attraction that it once was.

We also sold down our holding in Diversified Gas and Oil. Whilst we still like the longer term story, there has been some debate about the size of the future decommissioning liabilities when the wells reach the end of their lives and need to be plugged. We felt our single stock exposure was too high given the concerns and reduced our position.

We bought a new holding in William Morrison over the quarter and added to our holdings of Galliford Try, Synthomer and GlaxoSmithKline. William Morrison is a well-managed, prudently run supermarket group which differs from its peers in two ways. It still remains more vertically integrated and therefore has more control of its supply chain and secondly, it owns a greater proportion of its freehold property than its competitors.

One of the features over the year to date has been the numbers of takeovers of UK companies by private equity companies. Whilst the uncertainty over Brexit has put off many international public companies from acquiring in the UK, private equity has been very active. The fund has received three bids during the year in Tax Systems, Manx Telecommunications and Dairy Crest. Dairy Crest was taken over by Saputo, a Canadian listed company whilst the bids for Manx Telecommunications and Tax Systems were from private equity.


Whilst fears of a global recession stalk the market, we remain more positive about the outlook than many commentators. Whilst we are seeing a slowdown in economic growth globally, some of this comes from self-inflicted wounds such as Trump’s trade war with China and Brexit which have dented business confidence.

Governments and central banks still have the ability to respond to any slowdown in demand if necessary and in the USA and the UK, the tight labour market means we are starting to see real wage growth appear which is likely to drive consumer spending. As both the US and the UK economy are consumer dominated, the health of the labour market is a positive force for both economies.

Source: Premier Fund Managers Limited, July 2019. Performance data taken from FE Analytics, quoted on a total return (income reinvested), bid to bid, UK sterling basis, class C income shares as at 30.06.2019. Past performance is not a guide to future returns. Reference to any particular stock does not constitute a recommendation to buy or sell the stock.



Risk and other important information

When you invest, your money is at risk because the value of investments, and any income from them, can go down as well as up and you could get back less than you invested. The past performance of an investment is not a guide to how it will perform in the future. Because there are many different types of investment risk and investors have different attitudes to risk, we are not able to categorise our investments as having a specific level of risk. We would therefore strongly recommend that if you do not have professional experience in matters relating to investments, you should speak with a financial adviser before making an investment decision.

Premier Miton Investors is not authorised to provide investment advice or tax advice. Before making an investment decision, it is also important that you read the key documentation for that investment which is available in the literature section of the website, by contacting a financial adviser or by getting in touch with us directly. See ‘Contact us’ for more information or if you are unsure. You can find more details about the specific risks and literature that are relevant to each type of investment on the individual fund, portfolio or investment trust website pages.