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Santander Asset Management launches two income funds


Santander Asset Management has strengthened its portfolio investments fund range with the launch of two new income solutions.

The funds will complement the existing income solutions within the portfolio investments fund range, which is available through the Santander and Alliance & Leicester branches in the UK and has no upfront charges.

The objective of the Santander Sterling Corporate Bond Fund, which is managed in-house by Patrick Smith, is to provide a good level of income with the potential for capital gain. It does this by investing primarily in investment grade corporate bonds and government securities. The fund will pay out income on a monthly basis.

The objective of the Santander Enhanced Income Portfolio, which is managed in-house by Stephen Payne, is to provide investors with enhanced income returns with the potential for capital growth. Holdings are likely to include, but are not limited to UK shares, sale of covered call options, UK fixed interest securities and cash deposits. The portfolio will pay out income on a quarterly basis.

The Santander Enhanced Income Portfolio offers a target yield of six per cent. It is like any other income fund in that it invests in a range of both bonds and equities. However, unlike traditional income funds, the Enhanced Income Portfolio aims to generate additional income by selling the right to some of the potential capital growth on some of the holdings of the fund for a limited time period in return for extra income upfront.

The equity portion of the portfolio is based on the Santander Equity Income Unit Trust which is managed by Hak Salih.

John Bearman, chief investment officer at Santander Asset Management UK, says: “In a sustained period of low interest rates, there is clearly a real appetite amongst investors for a source of regular income. The Santander Sterling Corporate Bond Fund and the Santander Enhanced Income Portfolio provide just this.

“In addition, through the ability to sell rights to an element of capital growth on selected stocks, the Santander Enhanced Income Portfolio will provide the investor with confidence of a six per cent yield. It is ideal for those investors who want a degree of certainty to the income they will receive with the potential for capital growth.”

The range, which was launched in December 2008, now includes five income and five growth portfolios.

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