To be introduced on 25 January, the fund will be managed by celebrated fixed income duo Paul Causer and Paul Read, alongside chief investment officer Nick Mustoe.
At launch the portfolio will primarily be invested in fixed interest with an equity allocation of less than 10%. However, over time allocation to this asset class – with stock selection by Mustoe – will be increased to a maximum ceiling of 40%.
The fund will sit within the IMA Specialist sector; its stated objective is to uncover investment opportunities across the financials sector as it undergoes a long-term process of structural reform and rehabilitation.
Holdings have yet to be unveiled, though focus will be on both attractive income streams as well as capital growth as companies recover and move to the “new business model for financials”.
Read said: “The global financial sector is in a period of rapid change in response to the financial and economic crises of recent years. There are risks in the market but we believe there are also rewards. Investors who are interested in the opportunities in this sector have the potential to capture high levels of yield and build portfolios with attractive total return prospects in the years to come.”
Read believes the sector is moving towards a state in which the key element in bank capital is core tier-one equity, which can absorb losses.
He added: “I think that, over time, that is really one of the big, sort of thematic elements to what we are trying to accomplish with this fund. That should result in better and better valuations for that part of the capital market.”
Minimum investment in the fund will be £500 and it will carry a 1.25% annual management charge.
