F&C to launch Managed Portfolio Trust

F&C, the leading investment trust management group, is poised to launch one of the first new investment trust companies of 2008 by proposing to rollover its existing managed investment trust share portfolio services into a new vehicle: the F&C Managed Portfolio Trust.

New investors will also be able to subscribe for shares in the trust.

The F&C Managed Portfolio Trust will provide investors with a choice of two distinct multi-manager portfolios of shares in closed-ended listed investment companies - one focused on income, the other on capital growth - enabling investors to benefit from diversification, improved tax efficiency and transparent share price performance.

The fund manager of F&C Managed Portfolio Trust will be closed-ended investment company expert Peter Hewitt, who has been responsible for F&C's existing managed investment trust share plans since 2002 as well as the F&C Progressive Growth Fund. Hewitt is also part of the Edinburgh-based global equities team behind the F&C Multi-Manager Investment Trust Fund, an open-ended fund of investment trust shares.

Investors in legacy F&C managed investment trust share plans - including the ISIS Investment Trust Share Plan, PEP, ISA and TrustGuard Plan - will be offered the opportunity to either rollover into the F&C Managed Portfolio Trust, sell their investments or transfer existing holdings into their own name. Lifetime guarantees and investment protection on legacy savings plans will be unaffected for investors who rollover.

It is expected that the two separate portfolios will each comprise of at least 25 individual holdings, the majority of which will be equity investments. In recent years there has been a significant broadening of the areas in which investment companies invest and therefore the portfolios can access a wide range of asset classes other than, and not correlated with, equity markets in developed economies.

F&C Managed Portfolio Trust's Income Shares will be entitled to all the dividends of the company which are expected to be paid quarterly. An innovative new mechanism is that any net income generated by the underlying Growth Portfolio will be transferred to the Income Portfolio in exchange for a capital contribution of an identical amount. This structure will therefore help boost yield distributions for Income Share holders and enhance capital returns for Growth Share investors by providing a cost and tax efficient means of re-investing income. There will also be the ability for investors to convert periodically between Income Shares and Growth Shares and vice versa; such conversions will not be subject to UK capital gains tax.

"We believe the new company will provide numerous benefits to investors in terms of diversification, portfolio management and tax efficiency," explained Mike Woodward, Head of Investment Trusts at F&C. "First, it will enable investors to spread across a range of underlying managers, asset classes, strategies and markets, including - where appropriate - some exposure to listed investment companies in non-traditional asset classes such as natural resources, private equity, property and hedge funds. While there is no current intention to utilise gearing, the manager will have the flexibility to do so in order to further enhance investment returns."

"Furthermore, within an investment trust structure changes in the underlying portfolios will not give rise to potential capital gains tax liabilities as one might find with a traditional managed share portfolio. The choice between either Income or Growth shares will allow future investors to choose the portfolio most appropriate to their goals and personal tax situation. For example, with the imminent introduction of a new flat rate of 18% capital gains tax, for many investors there will be a distinct advantage to receiving returns in the form of capital rather than income, in which case the cost-effective mechanism of enhancing capital returns on the Growth Shares, in exchange for a transfer of yield to the Income Portfolio, may be a particularly attractive feature compared to the receipt and re-investment of dividends."

"F&C has consistently been an innovator in investment trusts and has a pedigree in managing investment trusts for 140 years. F&C Managed Portfolio Trust will enable investors to gain exposure to opportunities from across the entire closed-ended company sector in a very efficient and attractive structure."