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The portfolio is likely to fit into the IMA's Cautious Managed sector and will be run by Tom Caddick, fund manager at LVAM. Mr Caddick's multi-manager and fund selection team already runs six funds for LVAM.

The Diversified Income fund targets an above-average level of income with higher capital growth than inflation over rolling three-year periods.

The exact gross income target is 4 per cent a year, while LVAM expects the annual TER to be approximately 1.8 per cent.

The managers will invest the fund's assets in 10 sub-classes, including cash, fixed income, equities and commercial property.

The fund - the company's first in the Cautious Managed sector - complements the LVAM funds in the other two managed sectors.

The £21m LVAM Balanced Managed fund, as of 4 August, did not yet have a one-year track record, but over three months it came 74th out of 141 funds in the Balanced Managed, with losses of 8 per cent.

The £1.1m LVAM Stockmarket fund placed 47th out of 94 in the Active Managed over the same period, with a decline of 9 per cent.