MAM Funds is preparing to float a small and mid-cap biased equity income trust for new managing director Gervais Williams.
The Diverse Income trust will list on the London Stock Exchange in April, and will aim to raise £50m through an issue pricing shares at 50p each.
It will target an initial annualised dividend yield of 4% with a quarterly payout.
The new trust will have a diverse portfolio with stock weightings at between 1% and 1.5%, including exposure to the full market-cap spectrum, but with a bias towards the smaller end. It will have a management fee of 1% and an unlimited lifespan.
Williams has just landed at MAM, having left his role as head of smaller companies at Gartmore last year. He also managed the Gartmore Irish Growth trust, Fledgling trust and Growth Opportunities fund.
Williams says: "Perhaps surprising to most investors, just six FTSE stocks generated almost 50% of the FTSE All Share index dividend in Q4 2010, creating high stock specific risk as highlighted by the dividend cuts by BP and the leading UK retail banks.
"The Diverse Income trust will be an all-cap fund. It will be able to select the anticipated best income generators from a wide universe of shares in the FTSE 100, FT Mid Cap stocks and small and micro-cap sectors. The prospect for income growth within the small and micro-cap stocks, in particular, look attractive since many are not distributing at present."
MAM has also completed a £20m fund raising exercise aimed at repaying its debt and shoring up its balance sheet while former chairman Colin Rutherford has left the business.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation