The Acuim UK multi-cap income fund follows the same strategy as the diverse income trust, the investment trust run by Williams that was launched earlier this year. The new fund aims for income and growth by investing in 80 to 120 quoted UK stocks drawn across the market cap spectrum.
Each holding will make up no more than 1.5 per cent of the portfolio, which will have a bias towards small and medium sized companies. Williams believes the preoccupation with overseas equity income will not continue and also that investors looking to the UK for income will need to look outside the bigger stocks that many UK equity income managers have relied on to produce this. Williams feels small and mid-caps have more scope to grow dividends at a faster rate over the long-term relative to funds that invest mainly in bigger companies. He will focus on firms that yield 4 per cent or have the potential to pay this yield on a 12-month view..
Williams says many UK equity funds have similar portfolios and stock specific risk is high in some of the big stocks they hold as dividend payments are concentrated among a few names. When he started running portfolios in 1985, paying dividends was the way that companies attracted equity investors to raise money, but he says this link was lost during the credit boom. He expects dividends to play a bigger part in equity market returns in the current subdued economic environment.
This fund shares the recently launched Slater income fund’s multi-cap focus but differs in that it holds more stocks to increase diversification and reduce volatility. The Acuim fund should have lower volatility than equity markets in general due to its diversity and the defensive nature of high yielding stocks. It is expected to outperform falling markets and equity markets in general over three to five years, but may underperform rising markets.