Gartmore is making the cautious managed fund the focal point of its foray into this year's Isa season.
This fund is an Oeic that invests a maximum of 60 per cent in UK equities, with the remainder going into investment-grade corporate bonds. It will initially have 60 equity and 25 bond holdings and aims to provide income of between 4.5 per cent and 5 per cent a year, with the prospect of capital growth.
Chris Burvill, former Head of UK Equity Income at Investec, will manage the fund. He joined Gartmore last month after 10 years at Investec, where he managed the cautious managed and UK value unit trusts. He has also managd the Templ Bar and City of London investment trusts.
On the equity side the fund will adopt a barbell approach. This means that Burvill will hold stocks at the high yield and low yield extremes rather than making every dividend yield on every stock count. He says that when a company is trading badly, some fund managers will ignore the brand name and positive aspects such as sales ratio and market position, but he will try to focus on these.
With the bond element, Burvill favours telecoms because consolidation within the industry has meant the remaining companies are better capitalised with strong balance sheets. Exposure to sectors such as financials is likely to come through the equity elemet because of the risks that highly geared banks and insurance companies represent within a corporate bond context.
This fund could suit investors who need income but who want a combination of equity returns with the lower volatility of investment-grade corporate bonds. However, as the fund has the flexibility to move across both asset classes up to the specified limits, Burvill will need to ensure that he has the right mix to suit market conditions as they change.