equity income: value provides resilience

[7 min read, open as open as pdf]

• Equity Income total returns are underpinned by dividends
• Equity income has a value-bias, which typically translates to outperformance in an inflationary regime
• “Shorter-duration” equity income exposures make more sense with rising rates/ inflation

​Year to date performance
The dispersion between styles and segments within equities is pronounced in the UK.
Given recent market stress over the prospect of a rising interest rate environment, inflationary pressure, and geopolitical tensions, year-to-date performance underscores the relative resilience of equities with a Value/Income bias relative to other UK equity segments and world equities.
Year to date, world equities are down -5.93%, the FTSE All Share is flat at -0.55%.  UK Small Caps are down -8.49%, the FTSE 100 is +1.14% and UK Equity Income (Freedom Smart-Beta UK Dividend Index) is +3.97%.
This is because returns are underpinned by dividend income as well as exposure to energy and financials which benefit respectively from a high oil price/rising rate environment.

​Read in full as pdf