Fund review: Saracen UK Income Fund

Fund review: Saracen UK Income Fund

Saracen Fund Managers has launched a UK income fund that seeks to deliver a high and growing level of income with a 4.2 per cent yield at launch, or around 115 per cent of that of the FTSE All Share.

The fund is managed by Scott McKenzie who in the past ran UK equity income portfolios for nearly 20 years in companies like Britannia, Aviva Investors and Martin Currie. At Saracen, Mr McKenzie will adopt a multi-cap, non-index approach to stock selection, keeping in mind the group’s proprietary research.

The fund will have significant exposure to small- and medium-cap companies. At launch, this will make up 70 per cent of the overall portfolio. Saracen says the fund will also have a high-conviction, concentrated portfolio with typically 30 to 45 holdings.

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The fund has a longer-term investment horizon of five years and turnover within the fund is expected to be relatively low. The fund will offer an initial share class with an AMC of 0.50 per cent on the first £50m of assets raised across income and accumulation classes.

The company, based in Edinburgh, was established in 1997 in Glasgow and began managing assets in March 1999 with the launch of Saracen Growth Fund. The company’s Global Income and Growth Fund was launched in June 2011.



With a long-term investment horizon, this fund will look to invest in small- and medium-cap companies. It launched while the market was witnessing subdued levels of yield across asset classes. At a time like this, demand for income producing products is seen to be rising.

The fund is seen to be flexible and unconstrained by index considerations. The focus on mid- and small-cap companies helps in being diversified as compared to other funds in the sector that might have higher exposure to the same FTSE 100 stocks. With a more diversified portfolio, investors in this fund should expect less risk.

The fund is managed by Scott McKenzie who is also a significant investor, along with his peers at Saracen. This would theoretically mean the fund would be less risky and aim at maximum returns both for investors and themselves.

An ongoing charge is estimated at 1.16 per cent and it will initially charge 0.5 per cent on the first £50m of assets raised across income and accumulation classes.

Fund details:

• Sector: UK Equity Income

• Management fees: Initial share class – 0.50%

• Ongoing charges: estimated 1.16%

• Income distribution: Twice-yearly