Beaufort Investment is set to merge its multi-manager Sustainable Income and High Income portfolios, which have gradually seen greater overlap in their holdings since their 2010 launches.
It is hoped that the merger, which is set to launch for 1 July, will offer investors "the best of both worlds" with regard to size and regularity of dividends, according to Beaufort CIO Shane Balkham.
Among the funds allocated to for each portfolio are Artemis High Income, BMO Property Growth & Income, Fidelity Enhanced Income, Franklin UK Rising Dividends and Kames Property Income, according to their factsheets.
Speaking to Investment Week, Balkham explained that while the merger will help the portfolios in terms of scale, the key reasoning behind the decision is the lack of "differentiation".
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He said: "The funds have been going for ten years, but over the past 12 months the differentiation between them became narrower and narrower to the point where we do not need to run both separately.
"We want one really good portfolio offering the best of each, which is what the clients want. It is about having a clear proposition.
"Clients will not have to choose between a slightly higher yield, which pays out less frequently, and the Sustainable Income fund which is more regular in its payments.
"We are just trying to bring the best of both worlds together and make sure it is easy for the client."
Balkham added that the combined portfolio would pursue a set target yield, while minimising risk and offering diversification.
He also noted the merger comes at an uncertain time for equity income, with the coronavirus pandemic and the subsequent lockdown measures put in place having led to many firms cutting or cancelling their dividends altogether.
Balkham said: "It is important for firms to be really prudent at this point. But if you find and hold onto the right stocks, I think there could be some surprises for big special dividends payments nine-to-12 months down the line.
"There is definitely going to be some winners and losers from what was a traditional income generating asset class."
The Beaufort Investment High Income and Sustainable Income strategies are both at present split into two different risk-weighted portfolios.
High Income's higher risk portfolio is down 6.6% and 2.6% over one and three years respectively, and up 11.3% over five years. Sustainable Income's higher risk portfolio is down 4.5% and 0.5% over one and three years respectively, and up 15.2% over five years.
