The fund jumped four places in the bi-annual study by financial services group Sanlam, which has been running for more than 30 years and monitors the performance of UK equity income funds over a six-month period.

It returned 23.5% in 2019. Sanlam said it did not rank number one under any of its metrics, but “securely placed in the first and second quartile across our volatility, income and performance criteria, resulting in its first-place position”.

It knocked Liontrust Income – formerly known as Neptune Income – off the top spot. It now ranks 19th in the study, with near-term performance the main reason for its decline.

Equity income funds have become core holdings for many investors, particularly in the current low interest rate environment.

They tend to invest in large, dividend-paying companies.

However, the performance of many of these funds have come under intense scrutiny this year due to the suspension and subsequent closure of former star manager Neil Woodford’s flagship Equity Income fund.

Philip Smeaton, chief investment officer at Sanlam Private Wealth, said: “Investors have grown increasingly cautious of unquoted companies that are both illiquid and generally do not have surplus cash to cover dividend payments, marking them out as particularly vulnerable in times of market stress.”

He added: “A further note of caution arises from the concentration of the UK equity market, coupled with the increase in the number companies that are unable to cover the cost of total dividend payments from profits, instead diving into capital reserves.”

The Sanlam study categorises equity income funds into a White List, Grey List and Black List.

Funds on the White List have produced superior total returns over five years, while the Grey List can be a temporary home for a manager with an out-of-favour style or an early warning signal for a fund in decline, and the Black List is for consistent underperformers.

Here’s a run-down of each list:

The White List

Santander Enhanced Income took second place, returning 26% in 2019.

“After a tough period in 2016, the managers, Graham Ashby and Duncan Green have recently proved their worth again,” Sanlam said.

Man GLG UK Income dropped one place to third position “having distributed slightly less income than the Santander fund over the review period”.

The fund house Premier Asset Management has performed more strongly than in recent studies. Both Premier Monthly Income and Premier Income have jumped substantially, “with performance driving the resurgence and pushing the funds up 39 and 35 places respectively in the ranking”, the report said.

Allianz UK Equity Income jumped 30 places, having returned 28.3% in 2019, ranking third for performance out of the 62 funds assessed.

The Grey List

Liontrust Income, formally known as Neptune Income, fell massively from first place last year to 19th position.

“Near-term performance is the main reason for this decline and it will be interesting to see how the fund evolves following the team’s acquisition by Liontrust Asset Management,” said Sanlam.

Several funds have fallen quite dramatically within the Grey List. BNY Mellon Equity Income and Rathbone Income have fallen by 20 and 27 places respectively.

“Performance has predominantly caused these shifts; however, Rathbone Income has also ranked quite poorly on the amount of income distributed over the period analysed,” the report noted.

Unicorn UK Income has improved by 27 places.

“While the fund volatility is poor over the period assessed, performance has been excellent and it now ranks first, with a return of 31.7% in 2019,” Sanlam said.

The Black List

There were some new additions to the Black List. Liontrust Macro Equity joined from the Grey List, falling 21 places “mainly due to only average performance over the evaluated timeframe and poor third quartile volatility”.

The second and third additions to the Black List are Schroder Income and M&G Dividend, ranking 58 and 59 respectively. Each of the funds has fallen more than 15 places since the July 2019 study.

“Both funds have provided a dearth of distributed income compared with their peers and the inconsistency in long-term performance has had a large impact on their rankings,” Sanlam said.

Laggards that consistently appear in the Black List include HSBC Income, UBS UK Equity Income, and Janus Henderson UK Equity Income and Growth.

Two Standard Life funds, now known as Aberdeen Standard (ASI) funds, the ASI UK Equity Income Unconstrained fund and ASI UK High Income Equity fund have also tumbled down the rankings.

Smeaton said: “We believe that investors in the White List selection of funds who have held their investments over the long term have been well rewarded. However, cautious investors should seek to retain some cash deposits, and perhaps fixed income holdings, to reduce the overall risk of their portfolios and to use as a source of funds that may be needed at short notice.”