Active from 20 March, the SVS Cornelian Managed Income Fund will spread its hunt for yield across all sectors, market caps, asset classes and regions, utilising an unconstrained approach.
“We are very flexible in our asset allocation,” said Hector Kilpatrick, Cornelian CIO. “Income is an important component of return for people at the moment, and some of the asset classes that you would naturally look for income in are exhibiting very low yields.”
Targeting an expected yield of 3.8%, the fund will employ a risk-managed approach, as Kilpatrick explained. “We risk-map the fund against distribution technologies, with a risk banding of a five.”
“We cannot take the expected volatility of the fund above the distribution technology limit – the upper limit is 10.5%, and we expect to have an average of 10.1%. However, we can go below the lower band if we want to take risk off the table.”
The fund has a preference for equities, which account for around half of the portfolio, 25% in the UK and 25% international.
While investing directly in UK equities, Kilpatrick will use third-party vehicles for his international holdings, including F&C European Growth and Income, JO Hambro Japan Dividend Growth, Finley Park American and Schroder Asian Income.
Of the remaining assets, 30% is dedicated to fixed interest instruments, 9% is in commercial property, 8% to infrastructure and 2% in cash.
Sitting alongside Cornelian’s five other funds in its multi-asset range, the SVS Cornelian Managed Income Fund’s clean share class carries a 0.75% quarterly fee, paid out of capital.
Kilpatrick added: “We have an RPI per annum target of +2%, but that is over the investment cycle and is not something we would promise on a calendar year basis.”
