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By Mark Dampier, Hargreaves Lansdown

Adrian Frost is one of the most talented stock pickers in the UK. We believe his Artemis Income Fund could make an excellent choice for investors seeking rising income and capital growth.

If you are looking for an investment which offers the potential for both rising income and capital growth I believe there is one which stands head and shoulders above all others - equity income.

In the main, this is because of the inbuilt discipline required to run an income fund. In essence, shares can have an above average yield when their share price is depressed because they are out of fashion, unpopular or unloved. A good income fund manager will spot these companies before the herd who will drive up the share price. The income fund manager will then take any profits and re-invest, waiting patiently for the process to be repeated. Investors in an income fund enjoy a healthy yield as they wait patiently for each stock to be re-rated.

This fund currently offers a yield of 3.1% NET (variable and not guaranteed). This is a great starting yield, especially when you consider general rates available. What's more, over the years the income could grow. If you had invested £10,000 in this fund at launch you would have received £254 in dividends in the first year. Last year you would have received dividends of £484. In addition, your initial investment would now be worth £16,956 (Source: Lipper, Offer to Bid, 06.06.00 to 01.03.06.). If you had reinvested the income since launch your investment would have grown to £20,005 (Source: Lipper, Offer to Bid, 06.06.00 to 01.03.06.). Past performance is not a guide to future returns and please remember investments can fall in value as well as rise.

The principle of equity income appears simple, but it takes considerable skill to get it right. We believe Adrian Frost, the manager of the Artemis Income Fund, is one of the best in his sector. He has been managing top-performing equity income funds for more than 15 years and at Artemis he works at the heart of a thriving team.

The Artemis managers are part owners of the fund management business. This means that not only are their financial interests aligned with unitholders, but it also secures their tenure so investors can be more confident that a first class fund manager will remain in charge of their fund for the long term. In Artemis's case there is an extra incentive. Their fund managers are only allowed to invest in the stock market through Artemis funds - they only make money if their funds make money.

If you are looking for a core income fund I believe the Artemis Income Fund could make an excellent long term choice.

The Fund of the Month is written by Hargreaves Lansdown. An independent broker offering unit trust, stockbroking and other pension and investment services.

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