F&C Asset Management is looking to launch a closed-end US fund, following on from the unveiling of its strategic review concentrating on new ventures in its wholesale and consumer arms.
Wealth Manager can reveal that Edward Bramson's asset manager is considering the float of the F&C Barrow Hanley US Trust, the details of which are expected to become public in early June.
F&C will partner with Barrow Hanley Mewhinney and Strauss LLC, one of America's largest active managers of domestic equities, as it looks to get the new venture off the ground.
According to documents seen by Wealth Manager, the vehicle will be structured as an onshore UK investment trust and aim to generate growth in both capital and income by investing in a portfolio of large cap US equities with a value bias.
If the launch goes ahead the managers will target a portfolio yield that represents a premium to the benchmark.
Like most closed-end fund floats, it is understood that F&C is hoping to attract £100 million for the launch.
Although F&C was not available for comment, it is understood that the trust's portfolio will consist of some 40-50 US large cap stocks, and in-keeping with Barrow Hanley's process it will have an average price/earnings ratio lower than the market and a dividend yield higher than the market.
No more than 5% will be invested in any one issuer and a maximum of 15% will be allocated to a single industry. There will be a 35% cap per sector.
If it comes to market, it is unlikely that over the near-term the vehicle will use gearing, however it will have the flexibility to borrow up to 20% of its net asset value (NAV) built into its prospectus.
Bramson eyes new launches
In an announcement to investors on Tuesday, F&C executive chair Bramson said that the firm had decided to focus the second phase of its strategic review on its wholesale and consumer arms, which includes retail products and investment trusts, adding that exploring new launches was a key part of this plan.
In particular, Bramson said that F&C hoped to leverage off its success in property investing with the launch of a pan-European real estate fund, however it is also considering other products which could be offered to institutional markets, where F&C currently gets the bulk of its business.
In terms of its trust offering, F&C outlined that it would look to 'selectively introduce' new funds and raise additional capital for existing vehicles where market demand was high.
It is also looking to make a push into direct consumer marketing, and will look at its multi-asset and multi-manager offerings with this in mind.
In a separate announcement, it emerged that part of this revamp would include the Thames River brand being put into hibernation.