F&C bets on US smaller companies with new trust

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The Independent Online
FOREIGN & Colonial, the fund manager, is hoping to take pounds 50m with the launch of its new US smaller companies investment trust.

Despite some concerns that the US stock market looks expensive, James Findlay, who will manage the new trust, believes many opportunities remain among smaller companies.

He said: 'The US is becoming a much more entrepreneurial economy of small and medium-sized businesses. Some of the big industrial names are becoming less and less important.'

Mr Findlay intends to invest in 60-100 companies with a market value of between dollars 100m and dollars 1bn. This will give F&C Smaller Companies a choice of 1,500 stocks.

Institutional investors and private client stockbrokers have already indicated an interest in taking pounds 37.5m of the trust's shares. The offer period runs until 5 March. The costs of the launch will be limited to 3.5 per cent of the amount raised.

F&C's unit trust investing in US smaller companies, which is also managed by Mr Findlay, is the top-performing fund over the past five years. A pounds 1,000 investment would now be worth pounds 4,348.

The investment trust's life will be limited to 10 years as part of an attempt to prevent its shares trading at a discount to net asset value. With the exception of last year's personal equity plan investment trust, Mr Findlay said this was F&C's first new trust for 11 years.

Another new trust has been launched to invest in the shares of smaller UK companies, with capitalisations of up to pounds 30m. Pilot Investment Trust will be chaired by Sir Peter Michael, who made a fortune when he sold UEI, the electronics group, to Carlton Communications. Sir Peter has further enhanced his reputation in the past three years by leading the recovery of Cray Electronics.

Pilot's directors include John Jackson, who was Sir Peter's adversary in Cray's takeover bid for SD Scicon in 1991. Sir Peter opened the bid by claiming that SD Scicon, where Mr Jackson had only recently become chairman, had 'no management, no strategy and no profits'.