Norwich Union has changed the name and mandate of its income opportunities fund and turned it into the distribution fund.
Up to now, the fund has always had around 50 per cent in fixed interest and 50 per cent in equities. It has always had a reasonable record and for the last two years has been run by Roger Webb and Scott McKenzie.
They will continue to run the revamped fund and will be looking for an asset mix of 65 per cent fixed interest and 35 per cent equities. Fixed interest will be represented by corporate bonds, where NU has an 18-strong credit team, while the equity research department numbers 28.
The corporate bond element will have a gross yield of around 7.6 per cent, of which 50 per cent will be investment-grade corporate bonds while 14 per cent will be in high yield. The fund will be run in a similar way to the higher income plus fund but without the emerging market debt.
The UK equity portfolio is looking for safe high-yielding stocks and will be similar to the equity income fund run by McKenzie.
This portion is likely to be overweight in mid-caps, with a mix of 30 per cent in this sector and 70 per cent in FTSE 100 stocks. This is because McKenzie can find more interesting and better yielding stocks in the FTSE 250 index.
I believe the asset mix is ideal for many clients and an overall yield of 5 per cent with capital growth prospects provides a panacea for many investment scenarios.
There is no doubt that Norwich Union has both the resources and the talent to run such a fund.
Ben Yearsley is investment manager at Hargreaves Lansdown