The £200m F&C European fund will pursue income generation as well as medium to long-term growth from next month in a move that will also involve a change of name.
The fund, which was launched in November 1988 with the exclusive objective of capital growth, will from October 1 be called F&C European Growth and Income, to reflect the new objectives. Shareholders approved the changes at an extraordinary general meeting last week.
Wider Ucits III powers were adopted for the fund, which allow the manager, Paras Anand, head of European equities at the group, to use derivatives. He will also be allowed to invest in non-European equities within the limits imposed by the Investment Management Association (IMA) European ex-UK sector rules. A new income share class will be created for the fund, and will distribute quarterly. Investors will be offered a free switch into the income share class.
F&C says the widening of the fund’s objective is a response to shifts in the market. “European markets have changed considerably,” says Jason Hollands, head of communications at F&C. “There is much more of a dividend culture now and companies are much more shareholder friendly. Two decades ago, when this fund launched, that was not the case.”
Once Anand has adapted the portfolio to reflect the objective change, the fund will have more of an equity income style feel to it, Hollands says.
Anand joined F&C last year from Deutsche Asset Management in New York. Previously he managed the DWS European Opportunities fund, a 25-stock portfolio with a special situations bias. He took over management of the F&C European fund two months ago, working alongside Peter Jarvis.
Jarvis took over the European fund on a temporary basis last November after the departure of its previous manager Davina Curling. He continues to manage the Foreign and Colonial F&C Eurotrust and is deputy manager on the F&C European Dynamic fund.
According to Morningstar the F&C European fund is third and second quartile over one and three years respectively to September 15. Over one year it fell in value by 10.92% against an IMA Europe excluding UK sector average fall of 10.38%. Over three years it produced a return of 23.16%, compared with 23.1%.