Julian Cane has made several changes to the 258m F&C UK Equity Income unit trust to bring it into line with the F&C Capital & Income investment trust he already manages. This follows his appointment as manager of the unit trust last week, following the departure of its previous manager Michael Gifford.Cane, director, UK equities at F&C, says he had a choice of either slowly bringing the fund into line with his investment trust, or taking a more rapid approach. He chose the latter option and on Monday last week (July 4) he conducted a program trade of stocks to align the two portfolios. “I have kept a number of stocks that Michael had in the portfolio, but there have also been certain of changes. For example, before I took over there were several convertible bonds in the fund and these have now all been sold. This is because I believe in the long-term benefits of equity holdings. I think choosing the right stocks with the right yield is more attractive than going for convertibles,” he says. Cane has also added a 4.5% weighting in BP to the portfolio – a stock not previously held in the fund. While representing a large portion of the British stockmarket, he notes the oil company should generate a good level of dividend growth. In addition, he has increased the fund’s weighting in banks from underweight to neutral. He argues: “Despite the fact the level of consumer growth will slow going forward, I don’t foresee a large pick-up in bad debt, and most of the bad news has already been priced into the market. As a result I think it was wrong to be so cautious on the bank sector.” Cane’s appointment as manager of the fund followed a review of the F&C’s equity income platform. It concluded it should offer two distinct styles to suit the different needs of its client base. One is the traditional approach Cane uses of focusing on companies with above-average yields. The second is that used by Ted Scott on the Stewardship Income, and now the F&C UK Growth & Income funds, which is described as the “barbell” approach. That is, Scott focuses on both growth companies to boost capital return, and high-yielding equities to satisfy the funds’ yield requirements.