Equity Income Funds Get Boost From Top U.K. Lobby Amid Pandemic

(Bloomberg) --

Equity income funds run by firms such as Invesco Ltd. and Columbia Threadneedle Investments got a lift from the U.K.’s top industry lobby as the coronavirus pandemic threatens their revenue.

These funds are designed to pay clients a regular income based on dividend payments from the companies in which they’ve invested. This model has been put at risk as more and more businesses suspend and delay dividends during the outbreak, according to The Investment Association.

In response, the trade group is shelving some criteria it uses in grouping similar funds into “sectors” that allow investors to compare performance, according to a statement on Wednesday. The suspension is intended to ensure that investors have access to key information and allow managers to focus on long-term strategy, the industry group said. Without this move, funds that fell short of prescribed payout levels would automatically be removed from the sector.

“The measures we’ve introduced today will continue to provide savers with transparency on fund performance, while helping prevent short-term disruption to the equity income sectors, which are particularly affected by the economic consequences of Covid-19,” Jonathan Lipkin, director of policy, strategy and research at the Investment Association, said in the statement.

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