The independently-owned fund management boutique Saracen Fund Managers has just launched the Saracen UK Income Fund. The new fund aims to deliver a high and growing level of income from a UK equity portfolio.
The new fund will have a significant exposure to small and medium cap companies. It will also have a high-conviction, concentrated portfolio with typically 30 to 45 holdings.
The investment horizon is five years and turnover within the fund is expected to be relatively low, although Saracen claims that a rigorously enforced sell-discipline will help to minimise risk at a stock level.
Manager is Scott McKenzie. He has run UK equity income portfolios for over 20 years in roles across Britannia, Aviva Investors and Martin Currie. He said: “The Saracen UK Income Fund’s concentrated portfolio demands a highly-disciplined approach to stock selection as each holding must contribute to the fund’s income stream in a meaningful way.
“We believe there are significant opportunities in higher yielding medium and smaller companies: with ten large UK companies comprising more than 50% of UK market dividends, we believe there are structural issues ahead for income investors.”
Chief Executive Officer of Saracen Fund Managers Graham Campbell said: “Against a backdrop of subdued levels of yield across asset classes, the demand for income-producing investment products has never been higher. While there is a proliferation of equity income funds, the Saracen UK Income Fund is marked out by its flexible approach, wholly unconstrained by index considerations. Its focus on mid and small cap companies makes it an excellent diversifier from other funds in the sector which might have a high exposure to the same FTSE 100 stocks. We anticipate constraining capacity on this fund to ensure it can remain true to this focus.
“As a demonstration of his confidence in the investment process and philosophy, Scott will be a significant investor in his fund at launch, as will his peers at Saracen Fund Managers. As a business 100% owned by its staff we believe in aligning our own interests with that of investors.”