Unicorn Asset Management is to launch a closed end fund investing 100% in higher yielding UK smaller...
Unicorn Asset Management is to launch a closed end fund investing 100% in higher yielding UK smaller companies and to be managed by Peter Webb.
The Guernsey registered trust, to be called the Osprey Smaller Companies Income Fund, does not yet have an exact launch date but the group has started marketing it and it should launch towards the end of August.
Webb, manager of the Eaglet and Falcon investment trusts, will look to have around 30 holdings. He will be able to invest in any company up to a market cap of £1bn and is looking to generate a portfolio yield of 4%. It will be modestly geared with the capital structure comprising 70% in equities and 30% debt.
Peter Walls, director at Unicorn, said the trust is for investors who believe total returns will depend far more on income from dividend yields rather than pure capital growth as in the 1990s.
Walls said: 'Both the Eaglet and Falcon trusts do not have any policy on dividend yields, whereas Osprey sets a portfolio yield of 4%. As a result it won't buy the more growth-orientated investments that we would put into Eaglet and Falcon.'
The trust will not be targeting the retail market specifically, with the group not planning to make it available through an Isa wrapper or savings scheme. There will be an institutional placing of 35 million ordinary shares at 100p each and there will be £15m worth of debt.
The fund, quoted on the London Stock Exchange, will adopt international accounting standards, meaning it will charge the costs of debt to capital so that it can offer a starting yield of 5.5%.
Walls said that it is an excellent time to be looking at this area of the market with many companies demonstrating good, solid earnings.
Over three years to 8 July 2002, Webb's Eaglet trust is ranked first in the UK smaller companies sector, with its shares returning, on a mid to mid basis, 90.5%, compared to the sector average of 11.8%. Over one year it has not faired as well, posting negative growth of 24.8%, compared to the average return of -21.0%.
Falcon was launched in October last year and over three months to 8 July it is ranked 19 out of the 37 trusts in the UK smaller companies sector, falling 9.3%, compared to the sector average fall of 7.7%.
Last month Webb stepped down as manager of the Premier UK Smaller Companies unit trust in order to set up his own fund. Over three years to 8 July, the fund is ranked fifth out of 69 funds in the sector having achieved returns of 33.9% compared to the peer average of -4.2%. Over one year the fund was first in its sector, having grown by 2.1% on an offer to bid basis compared to the average return of -23.2% posted by the UK Smaller Companies sector.
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