JP Morgan Asset Management will proceed with the launch of a closed-ended fund investing mainly in US senior secured loans, following its successful test marketing at the end of September.

The new fund will be the second closed-ended fund launch this year from JP Morgan Asset Management, the largest manager of investment trusts in the UK. In June £136 million ($218 million) was raised for the JPMorgan Global Convertibles Income Fund, underscoring the strong demand in the marketplace for asset classes that can deliver strong current rates of income.

“What we found in our meetings with potential investors is that there is overwhelming support for another quality name in the loans space, and we believe we can raise significant assets for such a strategy. The senior members of the team that will run our new fund have been managing high-yield bond and loan portfolios together for more than 25 years, and assets under management in these portfolios stood at $35.9 billion as of 31 July 2013,” said Simon Crinage, head of investment trusts at JP Morgan Asset Management.

The placing and offer period for the new fund is expected to open in November, with the shares anticipated to be admitted to trading on the London Stock Exchange in early December. The firm said that Panmure Gordon will act as broker to the launch.

The new senior loans fund will target an initial dividend yield of 5 per cent on the issue price of £1.00 per share. It will have the ability tactically to gear its portfolio modestly to make investments. The portfolio will be largely focused on US assets, and will be hedged to sterling to suit the needs of mainly UK-based investors. JPMAM is seeking to raise at least £100 million at launch, the firm said in a statement.

As well as enabling investors to attain relatively high rates of current income, senior loans are floating-rate instruments and therefore provide a level of protection in a rising rate environment that may not be available from bonds, where coupons are typically fixed. There also are select situations that offer the potential for capital appreciation, although capital appreciation generally is a secondary consideration in the loan market. Loans are usually secured by a pledge of the issuer’s assets, often ranking first in priority of payment, and therefore senior to bonds in a company’s capital structure, which means they are less sensitive to changes in credit fundamentals and offer a greater level of capital and income security.

Separately, JP Morgan Asset Management has confirmed that its co-head of global thematic Gary Clarke has decided to leave the company for personal reasons.

Clarke was responsible for a range of funds, alongside Peter Kirkman. Taking over from Clarke’s responsibilities, Kirkman has been appointed lead portfolio manager on the JPM Global Equity and JPM Global Unconstrained Equity funds. Kirkman has served as named portfolio manager on these strategies since inception. The investment philosophy, process and management of the funds remain consistent, the firm said in a statement.