Jupiter has introduced the distribution fund, a unit trust that aims to produce income of 5 per cent a year with the potential for capital growth.
This unit trust invests 65 per cent in corporate bonds and other fixed-interest securities, with the remaining 35 per cent going into high-yielding UK stocks and shares.
The corporate bond element of the portfolio will be run by John Hamilton, who is already running the Jupiter corporate bond fund. He will look mainly for investment-grade corporate bonds, although a smaller number of junk bonds will also be held.
The stocks and shares element of the portfolio will be managed by Tony Nutt, who has been responsible for the Jupiter high income fund since 1996. Nutt will take a value approach to stock selection, going for companies that are trading at what he feels is below their true value. Factors he will consider include business models, how strong a company's dividend yield is and cash flow.
Investors who are looking for a higher source of income than building society accounts may find this an attractive addition to their investment portfolios. However, income of 5 per cent may not be enough to tempt investors with higher risk profiles. This type of investor may prefer to go for high yield bond funds which are better placed than the Jupiter fund to benefit from the high yields brought about by a choppy economic climate.
According to Standard & Poor's, the Jupiter high income fund is ranked one out of 36 funds and the Jupiter corporate bond fund is ranked 10 out of 57 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to January 25, 2002.