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Investec targets 6% yield for Stopford’s Diversified Income fund
by Emma Dunkley on Aug 30, 2012 at 07:18
The fund, which is a restructured version of the £75 million Managed Distribution fund formerly run by Alastair Mundy, will be a multi-asset product 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.
He said: ‘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.’
The fund invests in three main strategies, comprising equities, high yield and emerging market debt, as a way to deliver diversified, sustainable income with 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.
In the high yield bucket, which can constitute between 0% and 50% of the fund, the managers will select from the firm’s monthly high strategy universe.
In the emerging market debt (EMD) bucket, which can account for up to 50% of the fund, Stopford (pictured) and King will draw from the firm’s blended EMD strategy, in either local or hard currency depending on the ability to generate alpha.
Aird said the vehicle will directly allocate to stocks and bond, 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.
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