The firm, which launches its HL Multi-Manager High Income Fund in mid-April has unveiled the fund’s initial portfolio, but Gardhouse admits that the current world of ultra-low interest rates makes generating an attractive income “a real challenge”.
The reason for this, he says, is that many traditional sources of income have “evaporated” as bond yields have continued to compress and deposit accounts offering almost no income.
As a result, Gardhouse explained the fund is hoping to blend UK managers “who offer different strengths and investment strategies which complement each other” in order to generate the fund’s expected yield of Expected yield 4.5%.
“A lot of investment performance is luck, driven by style. So, we try to ensure that the managers we select have a demonstrable skill that they bring to the table. This could be a clear track record of stock picking ability as in the case of the Marlborough fund, or market timing ability as in the case of the Edentree fund,” Gardhouse explained.
At inception the fund will have roughly 60% in equities, the majority of which is through equity income funds, and around 40% in bonds.
Asked why the fund is only exposed to equities through equity income funds, Gardhouse said while it can be tempting to look to the new or fashionable sectors for ideas, equity income has been the most consistently good area to be invest in over most people’s careers. Equity income has been proven to be a fundamentally good place to invest.”
The fund’s initial holdings will be:
The initial portfolio:
Equity Income
- Marlborough Multi-Cap Income
- Artemis Global Equity Income
- Threadneedle UK Equity Alpha Income
- JOHCM UK Equity Income
- Jupiter Asian Income
- Newton Global Income
- Liontrust Macro Equity Income
Bonds
- Royal London Sterling Extra Yield Bond
- Jupiter Strategic Bond
- Kames High Yield Bond
- Fidelity Extra Income
- Royal London Corporate Bond
Mixed Asset
- Eden Tree Higher Income
- Artemis High Income
