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By most return and risk measures, the large Blackrock fund’s performance has been more impressive than the performance of the Invesco fund.
It had a poor 2016, the year that UK voters chose to leave the European Union, but otherwise it has generated better annual returns than the Invesco product over three years.
It also generated higher alpha (1.6 vs -3.94) and its returns have been less volatile (17.87% vs 18.6%). It also has a positive information ratio (a measure of risk-adjusted returns) of 0.34 compared with -0.78 for the Invesco fund.
Meanwhile, as McDermott noted, the Blackrock fund’s income yield is higher (4.5% compared with 4.13%) – which, of course, is important for a product that explicitly aims to earn dividend income.
The contrast between the two funds is also recognised by other leading fund research firms.
Morningstar has awarded the Blackrock product four stars based on historical returns and a forward-looking analyst rating of bronze, but assigns the Invesco fund only two stars.
FE Fundinfo, which bases its assessment on a fund’s three-year history of delivering alpha, minimising relative volatility and producing consistent returns, awards the Blackrock fund four crowns, but only one crown to the Invesco fund.
“Its far more consistent performance means we would pick the Blackrock fund,” concluded Chelsea Financial Services’ McDermott.