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Advisers and wealth managers

Artemis High Income Fund

All data as at 28 February 2017 except where specified
  • Summary
  • About the fund
  • Performance (class R)
  • Performance (class I)
  • Composition
  • Key facts
  • Investment insights
  • Literature
  • Contact us

The fund’s aims

The fund aims to achieve an above average level of income together with the prospect of rising income and some capital growth over the longer term.

Current prices and yield
(class R)

As at noon, 22 March 2017
Bid price (quarterly dist units)79.40p
Offer price (quarterly dist units)84.52p
Distribution yield (as at 28 Feb 17)5.6%
Underlying yield (as at 28 Feb 17)4.3%

Investment information
(class R)

Minimum lump sum investment£1,000
Ongoing charge (quarterly dist units)1.32%

The initial charge is currently waived. The ongoing charge includes the annual management charge of 1.25% and is shown as at the date of the Key Investor Information Document (KIID), where a full explanation of the fund's charges can be found.

Fund manager’s update

With economic data from most areas of the global economy remaining stronger than expected, the seemingly relentless rise of ‘risk assets’ (such as equities and high-yield bonds) continued in February. Interest rates in the US now look almost certain to rise at the next Federal Reserve meeting. During the month we again saw the impact of political uncertainty. Volatility rose in French assets as the looming presidential election created concerns about a potential victory for Marine Le Pen, dampening the French equity market and creating demand for German government bonds despite the strong economic backdrop. However, the star performers among government bonds were UK gilts. While some of their outperformance can be explained by increased concerns about a slowing economy in the face of Brexit, the extent of the move is somewhat puzzling - particularly given the Bank of England’s gilt purchases are due to conclude in the middle of March.

The UK equity market shrugged off its torpid start to the year by registering a gain of 3.1% in February.

That the fund performed well in February was partly thanks to a very strong month for high yield and partly due to the continued outperformance of financials. We took advantage of the strength in risk assets to sell Dollar Financial Group, which has continued to suffer from changes to the regulatory environment for lending. While the new issue market was busy, that was mainly among higher-rated, lower-yielding bonds - so we only participated in a junior bond from Verallia, a packaging company with a coupon of 8.25%. In addition we took a new position in the French retailer IKKS. It has come under pressure the last couple of quarters because of poor fashion ranges, but with a change of designers and a traditionally strong brand we believe the yield is attractive given the turnaround potential.

The UK equity market shrugged off its torpid start to the year by registering a gain of 3.1% in February. As gilt yields fell there was some rotation into defensive equities, supported by the surprising - but short-lived - bid for Unilever.

Aside from a small reduction in Ashmore and an addition to Legal & General, the only transaction of note was the purchase of Nordea (a Swedish financial services group operating in the Nordic and Baltic region). It has an attractive yield and we see the current negative interest rates as an anomaly given the underlying inflation and growth rates in the region. Nordea has already generated decent returns but higher interest rates would be a significant help.

04 November 2016

Alex Ralph: The return of inflation …

Alex Ralph, manager of the Artemis High Income Fund, considers the implications of rising inflation on bond markets, but is still finding opportunities in financials and high yield.

Value of £1,000 invested at launch to 28 February 2017

Value of £1,000 invested at launch to 28 February 2017

Data from 9 September 2002, when Artemis took over management of the fund. Source Lipper Limited, quarterly distribution units, bid to bid in sterling to 28 February 2017. All figures show total returns with interest reinvested.

Asset allocation

Asset allocation

Source: Artemis as at 28 February 2017. Please note figures may not add up to 100% due to rounding.

Percentage growth (class R)

12 months to 31 December7.1%1.6%4.8%13.1%22.3%
12 months to 28 February13.9%-5.5%5.6%11.2%20.0%
Please remember that past performance is not a guide to the future. Source: Lipper Limited, quarterly distribution units, bid to bid in sterling. All figures show total returns with interest reinvested.

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Alex Ralph: The return of inflation …

Security Code

About the fund

The Artemis High Income Fund combines bonds with higher-yielding equities to produce a yield greater than that of the Artemis Income Fund; as at 28 February 2017, its class I distribution yield was 5.6%*. As such, the High Income Fund is essentially a bond fund with an equity ‘kicker’ component.

So the fund looks to achieve higher than average yield, combined with the prospects of rising income and some capital growth over the longer term. And the fund offers both quarterly or monthly income.

  • Proven record: the fund has delivered a healthy yield and significant capital growth since Artemis took over its management in 2002, applying the same successful investment approach that has served the Artemis Income Fund so well.
  • Balancing risk and reward: at present, low interest rates have underpinned demand for high-yield bonds, driving up their value and sending their yields steadily lower. The managers are aware that these conditions will change – so they are prudent in their search for income.
  • An attractive regular income: the fund combines bonds with higher yielding equities to provide investors with an attractive source of income.

* Source: Artemis. Data as at 28 February 2017. The yield is for class I monthly dist and represents the Gross Distribution Yield.

Introducing the fund

Adrian Frost explains how he and fellow manager Alex Ralph make investment decisions.

Reasons to consider

The Artemis High Income Fund may be suitable for investors seeking:

  • an attractive source of income with the potential for capital growth
  • a fund that takes a higher level of risk than a ‘corporate bond’ fund but has the potential to provide a higher yield
  • a fund that invests predominantly in UK fixed-interest and preference shares

The fund’s current SRRI rating is 3.

Risk warnings

THIS INFORMATION IS FOR PROFESSIONAL ADVISERS ONLY and should not be relied upon by retail investors.
The fund's annual management charge is taken from capital. The fund may invest in fixed interest securities. The fund may invest in higher yielding bonds.
The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.
Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.
Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.
Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.

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