Gartmore's High Income trust is to increase its exposure to fixed-interest stocks and reduce the lev...
Gartmore's High Income trust is to increase its exposure to fixed-interest stocks and reduce the level of equities in the portfolio.
According to Mike Egan, analyst at HSBC, the trust missed out on capital growth during the technology boom and is now trying to gain exposure to the area through lower-yielding equities.
He said: "Capital growth on the trust has been relatively poor, and by putting more investment into bonds, convertibles and other high-yielding securities, it can increase its revenue from this area. This gives it the freedom to look at lower-yielding stock in areas such as technology which can provide it with strong capital growth."
In addition, the trust is issuing shares to the value of £20m in ordinary income and zero dividend preference form and will double its bank loan facility from £10m to £20m.
The trust was launched in March 1999 with a portfolio made up of 75% equities, managed by Brian Gallagher, and 25% fixed-income securities, managed by the group's London-based fixed-interest team.
Since launch, the trust has suffered as a result of increases in interest rates and the resultant increases in bond yields.
Volatile conditions in the FTSE 350 Higher Yield Index have also caused problems, due to asset performance generally taking place in sectors to which the trust has little or no exposure, Egan said The rebalanced portfolio will contain 62.5% equities and 37.5% fixed-income securities.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till