Gervaise Williams planning to invest initially in bonds, smaller companies and in-house funds
Gartmore's forthcoming VCT, managed by Gervaise Williams, is to have an Aim and Ofex focus.
Williams, who is looking to raise up to £25m in the Gartmore Premier VCT, already invests some £90m in Aim stocks out of the £1.2bn in UK and Irish smaller companies he manages for the group.
He believes the backdrop is positive for the launch of the product.
Williams said: 'While markets are critically low at the moment, smaller companies are very domestic orientated, so we are positive on the potential for absolute gains in Aim.
'Falling interest rates and increasing government spend will stimulate ongoing growth in the future. As the outlook for the economy and corporate earnings improves and confidence returns to the equity markets, there is likely to be a steady increase in the number of companies seeking finance.'
Williams warned there will be more profit warnings to come even though trading conditions in general are better than expected following the events of 11 September. He added that at the moment many directors have been buying rather than selling their own shares, so valuations are looking attractive.
He said: 'As this fund invests over a three-year period, it may actually be fairly ideal for equities to remain low over the next couple of years and then pick up four to five years down the line.'
During the first three years of the VCT's life, it will invest in corporate bonds, high yielding smaller companies and Gartmore collective funds.
The income generated from these will be paid out as tax-free dividends. It is intended that within three years the fund will have invested 70% of the portfolio in Aim and Ofex-listed companies and it will invest only in unquoted companies aiming to list within 18 months.
The minimum investment is £3,000, up to a maximum of £100,000 a year. Initial intermediary commission is 2.5% with 0.25% renewal.
The management fee is 1.5% of net assets in the first period to 30 September 2002, 1.75% of net assets in the following year and 2% for subsequent years. The offer period on the VCT is open and runs until 30 April 2002 or until it raises £25m, whichever is first.
Williams said that before investing in any company, the small-cap team looks at five important buy and sell criteria. It assesses the industry the company is in and its outlook for future growth, the company's franchise and the sustainability of a competitive advantage, it looks for strong management, the company's financial capability for future growth and a price target on the stock.
Simon Goodge, head of UK retail at Gartmore, said the fund will focus on identifying unexpected earnings growth and selling investments in companies where it is perceived there is a significant risk that earnings will disappoint against expectations.
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