Octopus Investments is to launch the FP Octopus UK Multi Cap Income Fund on the back of sustained investor demand for income in a low interest rate environment.
Octopus says the fund will take advantage of the company’s stock picking expertise to drive income, as well as target better than market returns, through a diversified portfolio of UK quoted companies.
Investing across the entire market cap spectrum, the fund will blend earnings and dividend growth from a diverse range of businesses from the FTSE 100, through to mid and small cap equities without relying on the limited number of traditional go-to dividend paying stocks. Targeting a yield of 4 per cent, the Fund aims to deliver predictable, growing dividends, paid on a quarterly basis.
The case for equity income is well understood, offering investors scope for sustainable and growing dividends, with the potential for capital growth. However, as just 10 stocks represent 54 per cent of forecast FTSE 100 dividend payments for 2018, and almost three quarters of traditional income funds hold these stocks, there is significant concentration within the income sector. Taking a multi-cap approach this new Fund will offer investors asset diversification across the portfolio.
The fund will be managed by the Quoted Companies team led by Richard Power and expands Octopus’ growing range of retail and institutional funds. Richard has over 20 years’ experience of smaller companies investing and the team collectively manages over GBP1.7 billion of assets in companies ranging in market cap from GBP10 million to over GBP3 billion. Chris McVey, will be responsible for the day-to-day management of the fund, leaning on two decades’ experience in small and mid-caps.
McVey, Octopus Fund Manager, says: “Small and mid-size companies consistently outperform their larger peers, while also demonstrating faster growth in earnings and dividends. By harnessing this growth potential and blending it with exposure to larger, more established businesses, we believe we can offer investors an attractive and more diversified route to income, while providing scope for better than market capital performance. Octopus’ long-established expertise in finding attractive businesses with strong fundamentals makes us uniquely placed to create growth and income for our investors through this strategy.”