UK equity income funds have always proved a popular investment with retail investors, but more so in conditions which have seen interest rates and bond yields plummet since the onset of the global financial crisis. However with 77 funds in the sector, choosing the right one can prove a tricky task.

With this Sanlam Private Wealth this week released its half-yearly Income Study, which for the last 20 years has revealed the best all-rounders within the UK Equity Income sector.

The study categorises the funds within the sector into three areas: The White List, the Grey List and the Black List.

The White List is made up of funds with assets under management of more than £20m that have produced superior total returns over five years. The Grey List meanwhile is either a temporary home for fund managers with an out-of-favour style or is “an early warning signal for a fund in decline”, while funds that enter the dreaded Black List are those which have demonstrated consistent underperformance.

So who were the winners and losers?

Knocking off Francis Brooke’s Trojan Income fund from top position in the White List was a new entrant, the CF Miton UK Multi Cap Income fund, managed by Gervais Williams and Martin Turner.

Sanlam noted: “Williams and Turner’s fund has produced solid returns on a cosseting basis, despite having a weaker 2016 compared to its own history. Furthermore, the fund has low volatility compared with peers as well as successfully providing more income than most over the past five years.”

Moving out of the Grey List in the last review to the White List was the Schroder Income Maximiser fund, while other entrants were the JOHCM UK Equity Income fund and the MFM Slater Income fund.

Dropping out of the White List into the Grey was the Trojan Income fund. Sanlam said its performance had not been as strong as previously “most likely due to its quality style bias which has started to move out of favour”. It added the amount of income the fund has prodiced over the past five years is much lower than its peers.

Other funds moving from White to Grey included the Smith & Williamson UK Equity Income and Fidelity MoneyBuilder Dividend funds.

The latest study showed few changes in terms of the Black List. Despite performance improving “substantially” in 2016, the Scottish Widows UK Equity Income fund ranked last again. It was joined at the bottom by HSBC Income and Aberdeen UK Equity Income.

If you have money invested in a fund in the Black List, Sanlam’s advice is that unless remedial action is being taken, it is a sign to look elsewhere.

Commenting on the study, Sanlam chief investment officer Phil Smeaton said: “In these uncertain and political and economic times, it is encouraging to see that UK income funds have only been mild affected.

“The most obvious benefit to UK income fund investors is on the income side: many UK dividend paying companies are multinationals with significant dollar denominated earnings and revenue. It is also important to note that equities do continue to have an important role to play in income generation, but as evidenced by the change in fund rankings, this has become a trickier and more volatile asset class to navigate than in the past.”