The fund aims to provide investors with a high level of income by investing in c.50 companies that are typically listed on a UK stock exchange, pay dividends and have long-term capital growth prospects.
James Lynch discusses the VT Downing Monthly Income Fund
Your capital is at risk and you may not get back the full amount you invested. Investments in this fund are for the long term and higher risk compared to investments solely in larger, more established companies. Please read full details of the risks here.
What do I need to know before investing?
Where and how is my money invested?
We invest across a range of UK companies with different market capitalisations, allowing us to proactively find businesses that we believe can provide an attractive yield and long-term capital growth.
Our rigorous bottom-up approach involves proprietary research and extensive due diligence, taking up to 18 months to get a comprehensive understanding of each company.
We have a high conviction approach to income investing and the fund's strategy is to unlock value in a concentrated portfolio of profitable smaller businesses that have a sustainable competitive advantage and a strong management team - at the right price. We focus on companies whose efficient operations and strong balance sheets allow them to pay secure and growing dividends.
The fund has a significantly lower exposure to the UK equity market's larger more popular dividend paying companies and seeks to generate income from alternative sources further down the market cap scale. We believe smaller companies are more likely to outperform as well as having the ability to take advantage of market inefficiencies, cheaper valuations and better growth prospects.
What's the investment process?
Our typical investment process is laid out below:
- Screening 2,000 companies for investment opportunities.
- Undertake initial due diligence on 200 companies.
- Produce a headline investment paper.
- Conduct fundamental analysis.
- Perform financial modelling.
- Determine valuation analysis.
- Produce full investment paper.
- Invest funds in companies.
- Daily monitoring of c.50 companies.
What are the risks?
Our investment funds are not suitable investments for everyone, so we recommend seeking financial advice. This fund may not be appropriate if you plan to withdraw your money within five years. As with all investments, there are risks you should be aware of and comfortable with before you invest.
- The value of your portfolio can go down as well as up so your capital is at risk and there is no guarantee you will get your investment back.
- Any income received from your investment can rise and fall.
- Investments in this fund are generally higher risk compared to investments in blue chip companies on a main stock exchange.
- The companies the fund invests in may be more volatile and be less liquid than other investments.
- The past performance of a fund is not a reliable indicator of future results.
Please note this is only a brief overview of the risks involved with investing in the VT Downing Monthly Income Fund. Please read full details of all the risks here before investing.
What are the charges?
These charges cover the management and administration costs of running the fund. These charges reduce the potential growth of your investment.
Initial charge: 0%
No exit charge.
Annual management charge: 0.75% based on the value of your investment.
There may be further charges for buying and selling assets for the fund and 'dilution levy' costs associated with entering or exiting the fund, this is to cover costs associated with your transaction.
Ongoing charges: this is currently capped at 1.00%
For more information about charges please read the fund prospectus.
Who's the team behind the VT Downing Monthly Income Fund?
The fund is run by James Lynch, who previously worked within the asset management division of Ernst & Young after specialising in smaller companies at HW Fisher & Company. He is a CFA Charterholder, Chartered Accountant (ACA) and holds the Investment Management Certificate.
James has experience in both public and private equity markets and adopts a differentiated approach to income investing, combining a multi-cap approach with small-cap expertise. He looks for companies with efficient operations and strong balance sheets which allow them to pay secure and growing dividends. We believe this gives the fund the best chance to outperform over the long term.
James is backed by a highly experienced investment committee and by the Downing Fund Managers team, which was established in 2011 by award-winning* fund manager Judith MacKenzie. Judith heads up the 13 strong team who manage over £333 million in publicly listed assets (as at 31 January 2021). The investment team have many years’ experience across both private and public equity markets.
*Named Small Cap Fund Manager of the Year, Small Cap Awards 2015 and Small Cap Awards 2013 for the Downing UK Micro-Cap Growth Fund.