The Guernsey-domiciled investment company is targeting an initial gross dividend yield of 4.5% in its first year though investing across a broad range of sectors.
It says the “equity sensitivity” of convertibles should see the asset class benefit from stock market rallies, while bond protection should act as a safeguard against any setbacks.
“Since the global financial crisis, plenty of companies have issued convertibles and UK investors are becoming more familiar with them again,” said Vallee.
“As such, we think demand for convertibles as an asset class will increase. This year alone, we have already seen $26.7bn (£17.5b) of convertibles issued, which at an annualised rate would equate to $80.2bn, more than was raised in 2012 or 2011.”
The JP Morgan convertibles team was formed in 1995 with current assets under management of just under $5bn.
The company’s offer for subscription will close on 5 June with the shares expected to begin trading on 11 June. It is looking to raise assets of at least £100m.
Dividends will be paid half-yearly in the first year, with the intention of moving to quarterly dividend payments thereafter. It carries a management fee of 0.75% per annum on net assets, and the issue price per share will be 100p, with an expected opening net asset value per share of at least 98p. Minimum investment is £1,000.
Simon Crinage, head of investment trusts, added: “In our view, the closed-ended structure is ideally suited to investment in a convertibles strategy focused on income and yield. With convertibles performing well in 2012 and continuing to do so into 2013, we feel now is the perfect time to launch this company.”
