Pounds 26m damp squib for launch of Isis investment trust

ISIS, the new investment trust designed to give investors a choice between income and capital, has raised just pounds 26.6m - about a third of what had been hoped for.

The public subscribed for pounds 18.7m worth of ordinary shares, with pounds 2m from the adviser, SG Warburg, and pounds 2.5m from the manager, Ivory & Sime. Institutions subscribed pounds 3.4m for convertible annuity shares.

Gordon Neilly, Ivory & Sime's finance director, said: 'There is obviously some disappointment in the size, but there are some plus points.'

Isis (Income and Savings Investment Schemes) has two classes of share. The ordinary shares, aimed at the public, pay no dividends. Income is generated by selling shares. All dividends go to convertible annuity shares aimed at institutions.

A total of pounds 10m worth of the latter were underwritten at 147p, but only pounds 3.4m was needed to back the demand for the ordinary shares which start trading next Wednesday.

Mr Neilly said that there would be excess demand because the scheme would have to buy pounds 3.7m worth of shares annually to satisfy the needs of the savings scheme, but only pounds 500,000 worth would be sold under the ingenious income generation plan devised to deliver tax-free income for those not using their full pounds 5,800 capital gains tax allowance.

One investment trust analyst said the launch was 'a pig's ear'. He blamed weak public demand on financial advisers being offered only 1.5 per cent commission against the normal 3 per cent for selling unit trusts.