This Ucits III compliant fund is aimed at the high-net-worth end of the market. Unusually, it will be available to the first 200 investors without an initial charge but Investors who subscribe after this point will pay a 3 per cent initial charge that will be split equally between Bedlam and the fund itself. This will benefit early investors as their shares will increase slightly in price every time a new investor enters the fund, as well as enabling Bedlam to keep the fund at an optimum size.
The fund will invest in a portfolio of 25-50 equities and will initially pay a quarterly dividend of £875 for each £100,000 invested, plus a bonus payment at the end of the fourth quarter. The minimum initial yield will be 3.5 per cent, which Bedlam regards as a sensible starting point. On the growth side, the fund will aim for an extra 5-12 per cent on top of the dividend yield.
The fund manager will use a top-down filter combined with a bottom-up screening process to identify market trends and highlight companies that will benefit from these. Companies with strong cash flow, steady or rising profit margins and rising dividend yields will be sought for the fund.
The manager will also look for catalysts for change, avoiding market consensus and focusing on stocks that may have fallen out of favour. In practice this may mean the fund will blend the highest yielding companies that appear in the portfolios of Bedlam’s other three funds.
The fund will take a cautious approach that is shaped by Bedlam’s view that global growth is starting to slow. Examples of stocks and sectors it favours include fixed line telephone companies such as BT group, food producers, business that benefit when there is less money around such as pawnbrokers and companies that are cutting costs as they restructure. It will not invest in companies rumoured to be close to a takeover as the manager is interested in real money, not simply the promise of it.
Bedlam’s approach may indicate there is a shift on the horizon towards more traditional sectors and regions, which some investors may find comforting. Its novel approach to charges sets it apart from other funds operating in similar areas but the £100,000 minimum investment will exclude many investors who would find it suitable.