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Introducing the LF Gresham House UK Multi Cap Income Fund

Transcript

The targeted fund objective of the LF Gresham House UK Multi Cap Income Fund is a high single digit total return. It’s a total return proposition targeting a 4% annual dividend yield plus the capital growth element to get it up to the high single digits.

Gresham House is a specialist asset manager business with a Strategic Equity division and the Multi Cap Income Fund, whilst it is an all-cap proposition, most of the Fund is invested in small and mid-cap businesses so having that expertise of looking through the investment universe within small caps and having the infrastructure, the people, the network and the set-up to do that is really valuable and really helps us drive our process and our returns.

The key differentiator for the Fund is the process that we have. We have a very structured and disciplined process and part of what that aims to do is really to reduce risk across the portfolio. We’ll actively screen out sectors that are binary or where the success of businesses is outside of management control. We’ll also actively screen out businesses on financial metrics and we will look to do a lot of our diligence within this Fund around the sustainability and the defensibility of earning streams.

Whilst a lot of that is quantitative led, there are a lot of factors that we look at in terms of company’s position within a market, what the barriers to entry are, what the customer value proposition is and we use our network to really diligence each of those individual factors so that we can come up with a holistic view of what we think the earnings potential and the income stream for the business is like over the long term.

There are a few things about the Fund that really resonate with clients. First is having a really focused objective on long-term risk-adjusted returns. The second is having a very disciplined, structured process to evidence how we reduce the risk and how we actively screen out companies and sectors that we don’t necessarily want exposure to. The third point is if you look at our Fund in the context of the wider sector, our focus is more on small and mid-cap stocks whereas a lot of the other funds are exposed to large-cap stocks and in terms of diversification, from a client perspective, they can get pretty diversified income source from having both funds which means there’s a lower correlation for them.