I have rated Giles Hargreave highly as a stock-picker for many years. His Marlborough special situations and UK micro-cap growth funds have been exceptional and I was therefore excited by the launch of the Marlborough multi-cap income fund in June last year. The fund, managed by Giles Hargreave and Siddarth Chand Lall, aims for a combination of income and capital growth, blending established dividend- payers with exciting smaller company stocks.

Last summer was a difficult time to launch a new fund. The fear of a global macro-economic slowdown and an intensification of the euro-zone debt crisis caused severe volatility and the market now stands significantly lower than it did when the fund launched. However, it was important to establish a dividend stream as early as possible to provide investors with a reasonable first income payment.

The managers therefore invested around two-thirds of the money fairly quickly, with the remainder following over the next quarter. Given the turbulent conditions, the fund has held up fairly well.

Running an income fund is a slight departure for Hargreave as he tends to look for small, growth-oriented companies. Yet in his research, he sees plenty of firms with good dividend records, so applying his expertise to this area should be a natural progression for him. With the majority of the portfolio devoted to small and medium-sized companies, it is also genuinely different to most equity income funds, which means it dovetails nicely with some of the better-known funds in the sector such as Invesco Perpetual high income, Artemis income and PSigma income.

They are all bigger company oriented whereas Marlborough multi-cap income has only around 10 per cent invested in FTSE 100 companies.

A focus on smaller companies can, of course, increase risk. To help reduce it, the fund has a wide spread of holdings – well over 100. There is no shortage of opportunities. The FTSE 100 contains 91 dividend paying firms but cast the net across the whole UK market and there are 717 companies to consider.

Hargreave looks for a dividend yield of at least 2 per cent and a growing payout, which cuts down the field to around 500 names.

At 63, Hargreave is the oldest in the team and there is a good mix of experience and up and coming talent. Siddarth Chand Lall is 32 but the other four members of the investment team have over 125 years of market experience between them and all are involved in meeting company management.

This is at the heart of their process and they typically meet over 25 companies a week between them, often using Hargreave’s long-established contacts.

The fund will not be as aggressive as the Marlborough micro-cap growth or special situations funds but an estimated yield of over 4 per cent should be attractive to many investors, especially given that the income should grow over the longer term.

In addition, a handful of stocks in the fund are non-dividend payers, where the team have identified the potential for dividends to be introduced, potentially providing additional uplift.

The fund has shown a pick-up in performance recently, clawing back some of its initial losses. With so much pessimism in this market, any kind of sentiment change is likely to have a big impact on many of the companies the fund owns, so it is definitely one to tuck away for the long term in my view.

Mark Dampier is head of research at Hargreaves Lansdown