fund is limited to 100 million shares with an offer price of 100p per share until 16 may
Threadneedle's UK Limited Issue fund is to open for subscription on 12 May, with a one-week 100p per share fixed offer period ending at noon on 16 May.
Subject to FSA approval, the fund will begin trading on 19 May. It will be closed to new subscriptions once 100 million shares have been sold, capping the fund at £100m if all the shares are bought within the offer period.
Run by the group's high alpha team, which includes named manager Mark Holden and team head Paul Findley, it will have a maximum of 30 holdings, offering exposure to Threadneedle's highest conviction stocks.
The portfolio will take advantage of recently altered UK regulations allowing semi-closed vehicles and cash and derivatives to be treated as long-term investments, with the ability to hold up to 100% in cash.
Around 10% in cash is the normal working parameter for the fund, moving up to 30% when bearish on the market in the short term. Holden said he is only likely to use the 100% cash capacity in extreme circumstances, such as an Enron-type corporate scandal in the UK.
The £100m cap on the fund is designed to keep it at a manageable size and give access to stock opportunities down the market cap scale. Although there are just under 700 stocks in the All-Share, the top five make up 33% by market cap.
According to Holden, a 2% holding in the 348th largest stock in the index, Rathbone Brothers, would require the fund holding 1% of the total issued equity and a larger portfolio would just not be able to access smaller stock opportunities.
As an example of the type of bets the fund will be able to take, the model portfolio currently has a 7.2% weighting in healthcare software provider iSOFT, which is not even in the All-Share.
Currently fairly bullish in outlook, the fund is 7.2% weighted in the software and computer services sector, against 0.6% in the benchmark, and has a zero weighting in defensive sectors such as general retailers, beverages and food producers.
The fund only offers an institutional share class with no initial charge or commission, as the group feels it is designed for professional investors rather than being a fully retail product. It is a UK authorised Oeic, however, and will listed in the IMA's unclassified sector.
The annual management charge is subject to performance, levied at 1.75% if the fund outperforms the FTSE All-Share Index over a calendar year on an NAV-to-NAV basis and falling to 0.75% if it underperforms the index on these terms.
The first measurement period will be slightly shorter, lasting from launch to market close on 31 December 2003.
Minimum investment into the fund is £100,000, with subsequent £25,000 top ups. Threadneedle is offering the shares on a first-come-first-served basis.
Anyone investing during the offer period will be classed as a seed investor, while those buying shares after the launch on 19 May will be fund investors. Any redeemed shares will be offered to seed investors first, then to fund investors and finally to new investors.
Subject to manager approval, the fund has the option to issue a further 25 million shares on each subsequent anniversary of the launch.
As yet, the fund is not Isable because the Inland Revenue has yet to make a decision on mixed asset funds within existing Isa rules.
Threadneedle has had to launch a new Oeic structure to house the fund, Threadneedle Specialist Investment Funds, and is looking at further specialist offerings to sit alongside the limited issue fund.
Although limited issue funds are technically Ucits compliant, launching the fund within Threadneedle's existing Oeic would have rendered the whole umbrella impossible to sell into Europe as many European countries have yet to adopt amended regulations.
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