BC Asset Management has introduced the property income and growth fund, a split capital investment trust that invests in commercial property.
The investment trust consists of ordinary shares, zero dividend preference shares and bank debt. The aim is to provide ordinary shareholders with a high level of monthly income and long-term capital growth and zero dividend preference shareholders with a pre-determined capital return on May 31, 2009.
The backbone of the investment trust is the property portfolio, which accounts for 75 per cent of the fund. The property sectors it covers are office, industrial, warehousing, retail and retail warehousing. Properties which have not already been let will not be considered as part of the portfolio.
The remaining 25 per cent goes into an income portfolio, which contains geared ordinary shares of investment trusts, corporate bonds and equities.
The split-capital structure gives investors a chance to focus on income, growth or a combination of the two. Commercial property could be an attractive area for investors, particularly as the stockmarket has been choppy recently, because it is not as volatile as investing directly in equities.
According to Standard & Poor's, the capital shares, income shares and geared units of BC Asset Management's Yeoman split capital investment trust are bottom quartile and the zero dividend preference shares are top quartile based on £1,000 invested on a mid-to-mid basis with net income reinvested over one year to May 21, 2001.