By Leo Bland Aberdeen Asset Managers is launching an offshore US split cap investment trust with th...
By Leo Bland
Aberdeen Asset Managers is launching an offshore US split cap investment trust with the US equity portion managed by Katherine Garrett-Cox and her team.
The American Monthly Income Trust will invest in a portfolio split between US large cap equities, fixed interest and other high yielding securities. The investment trust will be based in Jersey and will have three share classes - zero dividend preference shares, ordinary income shares and annuity income shares.
The zero dividend preference shares will have a gross redemption yield of 9% and the life of the shares will be seven and a half years. The ordinary income shares will pay out a yield of 9% while the annuity income shares will offer a yield of 15%.
The assets of the company are expected to be split 45% in ordinary income shares, 42.5% in bank debt, 7.5% in zero dividend preference shares and 5% in annuity income shares. Collins Stewart is the company sponsoring the issue and the shares will be chiefly placed with institutions and discretionary private client stockbrokers. Aberdeen is expecting to raise more than £200m through the investment trust launch.
The US equity large cap portfolio will be biased towards growth stocks and will be run by Garrett-Cox and her US team who joined from Hill Samuel Asset Management earlier this year. Aberdeen's specialist funds team, led by Paul Reed and Chris Fishwick, will manage the portfolio of fixed interest and other high yielding stocks. The fixed interest element of the fund will include BBB rated corporate bonds as well as income shares.
Garrett-Cox remains confident about the prospects for the US market despite it having seen one of the longest bull-runs in history.
She said: "We continue to be long-term believers in the strength of the US economy and we do not expect a recession in the forseeable future. We are preparing ourselves for a pretty good fourth quarter during which we hope to pick up stocks that we have liked for a number of years at good valuations.
"Generally though, you have to make a bullish case for the US market. Everything is intact; growth is moving along but without any visible signs of inflation."
She added investors will have to temper their expectations about future US equity returns. If corporate earnings continue to grow at 8% to 10% for the next few years equity returns could be 10% to 15%.
Piers Currie, investment trust marketing director at Aberdeen, said: "The geared ordinary shares offer investors a competitive yield, further diversification of the asset base of their income portfolios as well as growth potential offered from the US stock market."
The share placing opens this week and closes on 26 September. Dealings are expected to begin on 11 October. The fund will be available as an Isa when dealing in its shares begins. IFA commission on Aberdeen Isa business is up to 3% initial.
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