BFS Investments is going stateside for the first time, with the introduction of the US special opportunities trust.
Listed on the London Stock Exchange, the product is a split capital investment trust. It is aimed at experienced investors who are looking for both capital growth and income and who are willing to invest in a medium risk fund, and it joins the four existing split capital investment trusts in the US smaller companies sector. It will be available in the form of zero dividend preference shares, income shares and capital shares.
The trust will comprise two portfolios. The first, making up 60 per cent of the trust, will invest in the shares of companies with capitalisations of between £10m and $1bn that are seen to have good growth potential over the medium to long term. This part will be managed by the Guernsey-based arm of BFS, which will delegate the running of the trust to Renaissance investment managers in Dallas, which already has its US growth & income investment trust.
The other 40 per cent of the trust, will invest in high yielding UK investment trusts and reverse convertible bonds. These are bonds with a high yield that can be converted into either cash or shares on redemption, depending on whether the share price is higher or lower at redemption, compared to the initial issue price. It will be managed by BFS Investments.
BFS believes that now is a good time to invest in the US, especially as interest rates have come down recently in an attempt to bolster share prices, and further interest rate reductions might give share prices the kick start they need.
According to Standard & Poors the Renaissance growth & income trust is ranked 1 out of 4 funds, while the BFS absolute return income fund is ranked 30 out of 33 funds, based on £1,000 invested on a mid to mid basis with gross income reinvested over three years to April 16, 2001.