Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a614631

Investec launches Diversified Income fund with 6% yield target

John Stopford and Max King will run the fund, which is a restructured version of the £75 million Managed Distribution fund.

 
Investec launches Diversified Income fund with 6% yield target

Investec Asset Management is launching the Diversified Income fund for John Stopford (pictured) and Max King, targeting a yield of up to 6%.

The fund, which is a restructured version of the £75 million Managed Distribution fund formerly run by Alastair Mundy, will adopt a multi-asset approach and will complete the firm’s risk-rated Managed Solutions range ahead of the retail distribution review (RDR).

With the support of the firm’s multi-asset team, Stopford and King will invest primarily in equities, high-yield bonds and emerging market debt.

David Aird, managing director for UK distribution at Investec, said the fund will sit in the same Investment Management Association (IMA) sector – mixed investment 20-60% – and will not change its risk guidelines, although it has yet to be rated by Distribution Technology.

‘We believe there is a low interest rate, low yield environment for a while to come, and that all investors, whether seeking growth or the need to draw on income, have an insatiable demand for income,’ Aird said.

The fund invests in three main strategies, comprising equities, high yield and emerging market debt, as a way to deliver diversified, sustainable income and the potential to grow.

In the equities bucket, which comprises between 20% and 40% of the portfolio, the fund will invest in the universe of stocks used by Mundy in his Temple Bar trust, and the stocks in the firm’s global franchise universe, which consists of high-profile, global names.

The high-yield bucket can constitute between 0% and 50% of the fund.

In the emerging market debt (EMD) bucket, which can account for up to 50% of the fund, Stopford and King will draw from the firm’s blended EMD strategy, in either local or hard currency.

Aird said the fund will directly allocate to stocks and bonds, rather than funds, in order to keep the total expense ratio down, with charges of 1.5% for the A share class and 0.75% annual management charge for the RDR share class. Additional costs will amount to roughly 11 basis points.

‘Charges will be taken out of capital, because when we launched a fund with a specific income requirement, we want to maximise this for investors,’ Aird said. ‘There will be capital growth that can replenish the drag of charges over time.’

Some of the top holdings in the fund include a Ziggo bond yielding 8% and maturing in 2018, Avon Products yielding 5.7% in equities, and Hungary 7% 2022 in the emerging market debt category.

Sign in / register to view full article on one page

6 comments so far. Why not have your say?

Rosemary Pettit

Aug 30, 2012 at 12:21

Is it ISA?

report this

Ray Wolfe

Aug 30, 2012 at 12:55

An ISA is a wrapper, not a fund.

report this

David Chapman

Aug 30, 2012 at 14:00

Stop being a smarty pants - Can you bung it in an ISA ?

report this

Mark22

Aug 30, 2012 at 14:37

Do I read it correctly, "a yield of up to 6%" with charges taken out of capital.

I don't understand how the charges of 1.5% and 0.75% are decided and then there are additional charges that make up a further 11 basis points (is this 1.1%).

If my understanding is correct then you get an income of less than 6% and your capital depreciates at 2.6% giving a overall performance of (at best) 3.4%. I can do better with a cash ISA. I can get 3.8% for a 4year cash ISA with the Halifax.

report this

Mark22

Aug 30, 2012 at 15:45

I correct myself, 11 basis points is .11% which means its 1.61% overall, but this still means that the best performance that can be expected is 4.39% which isn't much better than the 5 year Halifax Cash ISA at 4% and includes a greater risk.

report this

dd

Aug 30, 2012 at 22:10

They did say "up to"! That could be any number you like, under 6%.

Even so, equity growth may make it interesting...

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the funds

  • Investec Managed Distribution A Acc Net
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Investec Global Bond A Inc Net GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Temple Bar (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • John Stopford
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Max King
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alastair Mundy
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet