Aberdeen looks to bring low-cost investment trust to market

Aberdeen Asset Management and BlackRock are to ask shareholders for permission to merge two investment companies.

The Aberdeen UK Tracker Trust and the BlackRock Income Strategies Trust would have a combined £500 million (€586.6 million) of assets under management.

Aberdeen’s diversified multi-asset team, which is led by Mike Brooks and Tony Foster, will manage the trust if it gains shareholder approval in March 2017.

The trust will be re-named the Aberdeen Diversified Income and Growth Trust plc and would target a total return of 5.5% above Libor net of fees over rolling five-year periods. Volatility is expected to be “well below” that of equities.

Aberdeen said the trust would build on the “experience and success of the managers” with similar open-ended portfolios but with the added benefit of a broader range of less liquid investments that could enhance returns and income.

Investments include listed equities, property, social and renewable infrastructure, emerging market bonds, loans, asset-backed securities, insurance-linked securities, private equity, farmland and aircraft leasing.

Brooks said: “Investors are looking for consistent performance from their investments[and] multi-asset investing is a good base from which to deliver that but many portfolios are too dependent on simple equity and bond allocations.

Aberdeen has £90 billion of assets under management within multi-asset portfolios and manages 19 UK-listed closed-end funds.

The trust will also propose management fees charged at 50 basis points on the first £300 million of net assets and 45 basis points thereafter, and says the ongoing charge will be one of the lowest in its peer group.

©2016 funds europe

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