F&C sets out MM merger proposals

Investors in the F&C Multi-Manager Distribution fund could see their income payouts increase if they agree to merge with the equivalent Thames River vehicle, led by Rob Burdett and Gary Potter.

However, management charges will increase across the range once the two sets of funds have combined.

F&C director John Yule has written to investors today setting out the proposals for merging its Multi-Manager range with the Thames River vehicles.

The changes will mean the F&C Distribution, Balanced and Cautious funds will merge with the equivalent Thames River portfolios.

If the mergers go ahead, the AMC will rise from 1.25% to 1.5%, in line with Thames River's current rate, although F&C believes TERs could shrink due to economies of scale.

F&C warns investors even if the merger does not go ahead, its AMCs will increase to 1.5% no later that 1 April, 2011.

Meanwhile, the yield on the Thames River Multi-Manager Distribution fund was 6.04% at 30 September, compared to F&C's 3.5%.

Yule says: "While there are favourable and unfavourable aspects to the proposals, we strongly believe merging the funds will ensure shareholders are best placed to realise the potential benefits from combining the F&C and Thames River multi-manager ranges."

F&C needs 75% shareholder approval for the mergers to go ahead, with a vote due to take place 24 November.

Despite having a strong retail brand and performance, Yule says the Thames River funds have experienced a net inflow of £447m since October 2007, compared to a net outflow of £131m suffered by F&C.