Liontrust directors William Pattisson and Jeremy Lang have created a standalone investment process f...
Liontrust directors William Pattisson and Jeremy Lang have created a standalone investment process for the group's First Income unit trust, writes Ruth Alexander.
The process, called Income from Equities, aims to deliver a fund total return higher than that of the FTSE All-Share over five years. At the same time it is designed to provide a portfolio yield above that of index linked gilts and with an income stream that will grow above the rate of inflation over five years.
The £16m portfolio will invest in the All-Share and focus on three types of stock: those with limited growth prospects but with a dividend yield above long gilts; those with a yield that is ahead of index-linked gilts as well as having growth prospects that are at least equal to inflation; and those relatively safe stocks, which show low yields and good growth.
At the same time the portfolio, run by Lang, can be tilted between aggressive and defensive positions.
Jonathan Harbottle, marketing director at Liontrust, said: "Jeremy has been running the fund according to the defensive approach, which basically entails avoiding the losers, since it first came on board in August 1996. He would buy stocks with above average yields but a lower than average chance of delivering disappointing news.
"Now, though, when the conditions are right, Jeremy will take an aggressive approach to the running of the fund. This will entail targeting those stocks that have significantly higher yields than gilts have and those which he believes will see dividend growth every year."
Harbottle said Lang has been applying a more aggressive investment style since the beginning of 2000 when equity income funds became more popular, following the bursting of the technology bubble.
The fund has a 5% initial charge, with 3% commission, a 1% annual management charge and 0.5% renewal is available. The group has three other unit trusts each with a distinctive investment philosophy.
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