Rathbone Unit Trust Management, part of London-listed Rathbone Brothers, is giving European investors access to its longest-standing fund in the UK.

Rathbone Unit Trust Management is to launch an offshore version of the £1.29 billion ($1.72 billion) Rathbone Income Fund to investors in continental Europe.

Domiciled in Luxembourg, the fund will invest via a master-feeder structure into the Rathbone Income Fund, managed by Carl Stick. Over the last year, that fund has delivered a cumulative performance of 13 per cent, compared to a sector average of 9.1 per cent, according to Trustnet data. 

The feeder fund’s strategy will mirror that of the master fund, which targets above average and maintainable income as well as capital growth primarily through the purchase of ordinary shares with an above average yield. There is no restriction on the economic sectors or geographies in which the fund may invest, though it will focus on UK companies.

Subject to regulatory approval, the Rathbone Income Fund offshore feeder will launch in October and will be marketed predominantly to retail investors via financial advisors, life companies and QROPS providers (qualifying recognised overseas pension schemes) in the UK and in Europe.

The sub-fund, which will have an initial distribution focus on Belgium, Ireland, Spain and France, will be part of Rathbones’ recently launched SICAV umbrella, which already holds offshore feeder funds for the Rathbone Ethical Bond Fund and the Rathbone Multi-Asset Total Return, Multi-Asset Strategic Growth, and Multi-Asset Enhanced Growth portfolios.

The fund will have sterling and euro share classes available at launch and dollar share classes may be created if there is sufficient demand, Rathbones said.

“Yields are at all-time lows, the search for income is intense; yet, are we on the cusp of a change in the interest rate cycle, led by the US? In the UK, we experienced the shock of a vote to Brexit, yet corporate and economic news at this early stage presents a veritable shrug of the shoulders, so markets have tottered on higher,” said Stick.

“While there continue to be many opportunities in the UK, our challenge over the next 18 months is to navigate volatile markets. Some areas will continue to look overvalued, but there will also be some great companies on sale.”