Alaric wrote:UnclePhilip wrote:But surely, as the fund info says they track shares in the FTSE with above average yield, the 5-6% becomes realistic?
Certainly, you were looking at a fund which tracks a subset of the FTSE 350 Index, rather than a whole index such as the FTSE 100. The potential problem and risk is that a mechanical selection of shares is liable to automatically invest in dross. One problem with searching for high yield is where companies are falling on hard times.
Surly all indexes including ftse 100 and 250 are constructed using ' A mechanical selection of shares'?
During the financial crisis most managed equity income trusts only maintained their dividend by releasing reserves, managed equity income funds had to cut their payouts. Investors can easily hold their own reserves.
The Vanguard UK equity income fund should be much less volatile than iShares IUKD because it holds more than twice the number of companies and is cap weighted both of which result in less volatility over time .
regards
Dave