Britannic Asset Management has introduced its third investment trust, the Britannic UK income trust.
This split capital investment trust is divided into a growth portfolio consisting of UK shares and an income portfolio containing split capital shares and corporate bonds.
The ordinary shares and zero dividend preference shares are aimed mainly at institutional investors such as pension funds, but the guaranteed income shares are intended for the IFA market.
The guaranteed income shares are offered at 100p a share and are redeemed at the same price after five years. Investors get an annual income of 7 per cent.
The ordinary shares have a target yield of 8.5 per cent a year and the zero dividend preference shares have a redemption yield of 9 per cent at the end of their five-year life-span.
The guaranteed income shares are likely to suit risk averse investors who are looking for a guaranteed level of income and the return of their original capital.
However, one drawback for investors is that their income will remain at 7 per cent. Although this is good news if the UK stockmarket is poor, investors could miss out on higher returns if it performs very well during the next five years.
According to Standard & Poor's, the Britannic smaller companies trust is ranked 17 out of 35 funds based on £1,000 invested on a mid to mid basis with net income reinvested over three years to July 6, 2001.