Best and worst: UK Equity Income

FUNDS with a higher proportion of their investment in smaller companies and convertibles were the better performers in this sector over one year.

Nick Train, director of GT Unit Managers, said: 'There have been a couple of things that have paid off handsomely. The fund has a significant weighting in the mid-cap stocks, and the medium-sized companies have out performed the top 100 companies.'

He added that his decision to increase the fund's weighting in convertibles 18 months ago to 20 per cent of the fund had acted as a buffer against the recent volatility in the market.

The fund has also increased its investment in the shares of other unit trust companies - such as M&G - which have rocketed because millions of pounds were poured into unit trusts at the end of last year and the beginning of this one.

L&C Unit Trust Management, part of Credit Lyonnais, said its performance had been boosted because it has a low initial charge of 2 per cent.

Howard Maguire, UK investment director of the newly formed Threadneedle Investment Management, which manages Allied Dunbar funds, admits that the performance of its funds has been abysmal over the last year.

He said: 'This has been due to the UK's pull-out from the Exchange Rate Mechanism.' Before the pull-out, the funds had been among the top performers.

----------------------------------------------------------------- UK EQUITY INCOME ----------------------------------------------------------------- The best pounds 1 L&C Income . . . . . . . . . . . . . .111.09 2 Jupiter/Merlin Income . . . . . . . . 110.96 3 GT Income . . . . . . . . . . . . . . 110.59 4 Exeter High Income . . . . . . . . . .109.76 5 St Vincent High Income . . . . . . . .109.05 The worst 100 Edinburgh Equity Income . . . . . . .93.89 101 Fidelity Income Plus . . . . . . . . 93.32 102 Allied Dunbar Equity Income . . . . .92.49 103 Allied Dunbar High Yield . . . . . . 92.31 104 Five Arrows Equity Income . . . . . .92.22 ----------------------------------------------------------------- Figures are for the performance over one year, offer to bid, net income reinvested. ----------------------------------------------------------------- Source: Micropal -----------------------------------------------------------------