BFS Investments is rolling out a split cap investment trust with the UK equity portfolio managed by ...
BFS Investments is rolling out a split cap investment trust with the UK equity portfolio managed by Alan Brunsden.
The split cap, which will be called the BFS UK Dual Return Trust, will offer zero dividend preference shares, income shares as well as capital shares. Retail investors will be able to access the fund through geared units, which will combine one income share and one capital share and offer a net yield of 8.5% or growth units, which will combine one zero with two capital shares.
Investment Week understands that the split cap is to be offered as a rollover vehicle for investors in another investment trust undergoing a reconstruction.
The zeros will have a gross redemption yield of 8.25% and a life of seven years. The fund will be split 65% in UK equities and around 20% in reverse convertibles, with this part of the portfolio managed by John Holder. Around 15% of the portfolio will be in income shares with this part of the fund managed by Keith Bunyan. The income shares are expected to yield around 9% while the reverse convertible portfolio is expected to produce a yield of 13%.
Nigel Sidebottom, director of BFS Investments, said Brunsden's UK equity portfolio will not have to deliver an above market yield and so has the ability to focus on growth stocks. He said Brunsden will be able to do this as the reverse convertibles and income share elements of the portfolio are expected to meet the fund's income requirements.
Sidebottom said BFS is looking to raise over £100m from the launch of UK Dual Return Trust which is UK domiciled. He added that the structure of the growth units offered on the fund is unique in the UK.
He said: "The fund offers something for many types of investor, with geared units for income investors and growth units for those not looking for taxable income but wanting capital growth."
IFA commission on growth units will be 2.95% initial and will be 3% on the geared units. The split cap will also be available through BFS's Isa, which will pay 3% initial commission and up to 0.5% renewal.
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