Gartmore Absolute Growth & Income Trust
Type: Investment trust.
Aim: Growth and income by investing in UK growth companies, securities of split capital and high yielding investment trusts.
Investment split: UK growth companies 60 per cent, securities of split capital and high yielding investment trusts 40 per cent.
Yield: Ordinary income shares 8.6 per cent or 9.5 per cent if in an Isa, zero dividend preference shares 9 per cent.
Minimum investment: Isa lump sum £3,000, monthly £100. Savings scheme lump sum £1,000, monthly £50.
Types of share: Ordinary income shares and zero dividend preference shares.
Isa link: Yes.
Pep transfers: Yes.
Charges: Isa – initial 3 per cent, annual 0.5 per cent. Savings scheme initial 1 per cent.
Commission: Initial 3 per cent, annual 0.5 per cent.
Tel: 0800 212433.
Martin Dilke-Wing, Director, Morgans Independent Advisers,
Christopher Collins, Senior partner, Kingston's Financial Management, Michael Both, Partner, Michael Philips,
Derry Fleming, J Derry Fleming Insurance Consultants.
Investment philosophy 6.8
Past performance 6.8
Company's reputation 8.0
Product literature 7.5
The Gartmore absolute growth and income trust is a split capital investment trust that invests in small to medium caps in the UK.
Identifying how the trust fits into the market, Collins says: “Over recent years, this market has become somewhat crowded in the split sector and there is plenty of competition. With this caveat, the trust should fit in to the sector well, especially with Gartmore's Save It system, which will allow versatility.”
Fleming thinks the trust would be suitable for most investors for different reasons and feels it should be a good, steady performer.
Both suggests that the market could use some more quality split capital investment trusts. Dilke-Wing says: “There is a vogue for investment trust launches at present and I expect to see that vogue maintained as a consequence of the its campaign and a growing demand for zeros in splits. The marketing of this trust as an 'absolute' return fund also employs buzz terminology as to whether it is a good investment. But performance will be the sole arbiter.”
Moving onto the types of clients the fund would suit, Dilke-Wing says: “The trust is suitable for clients who have an appreciation of the risk factors inherent in this type of geared investment. It is suitable for those interested in the ordinary income shares and who are active high income seekers. The zeros are attractive for those seeking a low risk investment, but the headline rate is acceptable rather than spectacular.”
Fleming says: “This seems to be suitable for the small safety conscious or new investor. It would also be a good safe addition for the bigger investor.”
Collins says: “It is suitable for retired people requiring high income and people with high rates of tax. It might also suit hose prepared to accept a higher degree of risk to obtain a higher reward.”
Both says: “There are two types. At nine per cent, the zeros look very attractive, especially with a launch hurdle rate of2.6 per cent over seven years. The highly geared ordinary shares are very aggressive and will appeal to more adventurous investors.”
Assessing the potential marketing opportunities, Both says: “The highly geared shares could be excellent for Isas, offering a high yield with the prospect of capital growth. The zeros would be good for risk averse investors wanting o use their capital gains tax allowance outside of a tax efficient wrapper.”