F&C to launch F&C Barrow Hanley US Trust
F&C Investments, a London-based investment management group, is to launch the F&C Barrow Hanley US Trust, an onshore investment trust that will seek to generate growth in both capital and income by investing in a portfolio of large cap US equities with a value bias.
F&C has delegated discretionary management of the portfolio to Barrow, Hanley, Mewhinney and Strauss, one of the USA’s largest active managers of US value-oriented equities, with more than $66bn in assets under management.
BHMS aims to produce attractive total returns with a value-oriented investment strategy. A further aim of the strategy is to protect investors’ capital in difficult markets.
F&C’s actively managed portfolio is expected to consist of 40 to 50 stocks, identified by BHMS through its investment process as undervalued. The investment strategy employed seeks to construct a portfolio of individual stocks that reflect each of the following three value characteristics: price/earnings ratios below the market, price/book ratios below the market and dividend yields above the market (S&P 500).
F&C believes that, as a result of signs of recovery in the US economy, there has been an increase in the demand for US equities. However, the ability of investors in the UK investment trust market to take advantage of this investment opportunity has been limited due to restricted access to US securities. Therefore, F&C Barrow Hanley US Trust will provide investors with an opportunity to gain strategic, value added exposure to the US equity market.
F&C believes there are a number of key structural advantages for the US market as opposed to other geographic regions. Although US unemployment remains high, F&C believes that the US has a relative strength advantage in both growth and profitability, especially when compared to Europe.
F&C believes that the renewed interest in larger capitalisation US domiciled stocks can be attributed to their strong balance sheets and cash stockpiles; global investor interest in liquid, US dollar-denominated investments; a search for yield, or simply a reversion to the mean after several years of lagging performance.