M&G Equity Trust is increasing its gearing and implementing a barbell investment approach between c...
M&G Equity Trust is increasing its gearing and implementing a barbell investment approach between corporate bonds and growth stocks.
The £270m split cap, managed by Richard Hughes, has had its performance hampered by exposure to high yielding equities which have reduced its capital growth.
The introduction of £60m of gearing, to be invested in a mix of sub-investment and investment grade UK corporate bonds, will enable the equity portfolio to move down the yield curve. Currently 55% of the portfolio consists of FTSE 100 stocks. Exposure to technology, media, telecom, drug and oil companies is likely to be be increased.
Following the restructuring, 70% of the portfolio will be invested in equities and 30% in fixed interest securities. The portfolio has between 8-9% invested in corporate bonds. While wanting to ensure better capital growth Hughes also wants to grow the dividend on the trust's income shares. The 34.5p shares provide a net dividend yield of 11.5%.
Because of a disappointing four years, the annual charge on the trust is to be reduced to 0.75% from 1 July.
A performance fee is to be introduced, subject to the total fee payable to the manager not exceeding an amount equal to 1.25% of the average net assets in any year.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till