Have equity income funds had their day? – Merry Somerset Webb on QuotedData research
In the 1950s, the point of investing was simple. It was, says John Littlewood in his book, The Stock Market: 50 Years of Capitalism at Work, “to provide assets to match as closely as possible the liabilities stretching years into the future over the lifetime of individual policyholders”. John Maynard Keynes agreed. The ultimate object, he said, of normal institutional investment “is to purchase a reasonably secure annual income year by year over a moderately large number of future years”. What mattered most to postwar investors was dividends — and only dividends. They were not much concerned with any of the valuation metrics we obsess over today to figure out exactly how much profit a company made, or how much more of a dividend the directors could pay out if they felt like it. It is quite certain, said financial journalist Harold Wincott at the time, that “it is dividend yields which govern security values”. Nothing else. That led to situations that we would consider completely bonkers today. In 1952, shares in …
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