Collins says: “There are various marketing opportunities. Clients requiring high income, those paying 40 per cent tax, and those who use zeros for school fees planning using the zeros. It could also be used where high income and capital growth are needed to cater for different classes of beneficiaries.”
Identifying the main useful features and strong points of the trust, Collins says: “High income which might grow and capital growth in the income shares, which can be protected in an Isa. The hurdle rate is attainable, there is the ability to mix and match and the trust is run by a well known company.”
Dilke-Wing says: “The main useful features of the product are that it offers one class of investor a high income with the prospect of a relatively stable high yield.”
Fleming says: “There are many people who are now looking to diversify into smaller markets.”
Both says: “The split capital structure, the high gearing and the monthly savings option. The flexible commission means it can be offered on whichever terms best suit the client.”
Analysing the investment philosophy, Fleming says: “It is excellent and I agree with its philosophy.” Both says: “It's a bit cannibalistic, with 20 per cent in a portfolio of other split caps and high yielding investment trusts. One hopes that it will not be used simply to bolster the share prices of other Gartmore investment trusts. I would also prefer it if it was not so UK-centric.”
Pointing out the trust's disadvantages, Fleming says: “The potential disadvantage is that by going for immature stocks, growth could fluctuate wildly. But by using experienced staff at Gartmore, this risk should be minimised.”
Both says: “The high gearing could be a problem the loans are not secured at a competitive rate. The fund manager should be able to earn a return above the cost of borrowing. But it could prove a real problem if they do not, especially in the early years.”
Collins says: “There could be high volatility on the income side, both in share price and income produced. The zeros can also be more risky then their perceived low risk status. However, the hurdle rate at 4.5 per cent on the income shares is not high and the cover at launch on the zeros is reasonable.”
Dilke-Wing says: “The trust's disadvantage is that its structure and risk ratings are far too complex for the mainstream investor. To evaluate accurately the relative merits of the investment philosophy and whether it would make a suitable investment in the context of their overall portfolio would need some consideration.”
Assessing Gartmore's reputation, Both thinks it is generally very good. Collins says: “To refer to Gartmore as a household name is probably incorrect but it is certainly very well known among the investing public and is well regarded.”
Fleming thinks Gartmore is an excellent long-standing company with a reliable name.
Dilke-Wing says: “Gartmore's reputation is sound in a number of areas, but notably in the areas covered by this trust. Any management groups has its star funds and its dog funds. Based on short term statistics, it may appear strange that Gartmore, at least in respect of the fixed interest component, has focussed on any area where it is not strong.”
Assessing Gartmore's past performance record, Fleming thinks it is excellent. Dilke-Wing says: “Gartmore operates a range of pooled fund vehicles with over 50 years investment track record. As would be expected, the performance is chequered..”.
The panel consider the likely competitors for the fund. Collins says: “The main competition on the income side will be other split cap income and residual growth shares such as Fleming and Murray, and also three to five year guaranteed income bonds.
Both suggests Aberdeen development capital, BFS absolute return, Govett Euro technology & income, Morely's high income and Jupiter's investment trust of trusts.