The manager is relatively pessimistic on the prospects for global growth and expects the general consumer to pull back on spending in developed markets.
"World growth has been exceptional in the last 25 years or so, but now I think we’re going to see a slow-down. Austerity measures from governments are taking their toll on consumer spend, and tax-take all over the world is on the up," he said.
"Consumers in developed markets have and will continue to hold back on their spending, which is likely to have an impact on emerging markets since we import the majority of our goods from these economies."
"International earnings have been very strong in terms of growth, but I don’t think many FTSE 100 companies will grow their dividends this year. This is why I favour the mid cap market."
Performance of index since 1970
Source: Financial Express Analytics
Fund raising for the MAM Diverse Income Trust closed last week and it started trading as a share on 28 April. Assets under management (AUM) currently stand at around £50m.
Williams was reluctant to talk stock specifics as he is cautious on the market and is yet to finalise the portfolio, but he did suggest it would be heavily weighted to FTSE 250 companies.
He commented: "It is unlikely that there will be more than 10 FTSE 100 stocks in the portfolio. There will be much more of a focus on FTSE 250 stocks, though it is important to remember we are bottom-up stock pickers and will be choosing companies on their individual merit."
"We hope to differentiate it [from our competitors] by providing an income that grows faster than others from the 4 per cent yield at issue."
The Diverse Income Trust is different from any investment vehicle that Williams has headed up in the past.
The open- and closed-ended funds that he previously managed – Gartmore Growth Opportunities, Irish Growth, the Gartmore Fledgling Trust and the Gartmore UK & Irish Smaller Companies fund – were all small cap-focused vehicles that placed an emphasis on growth rather than income.
While the manager has an excellent long-term track record, some may view Williams’ limited experience in large cap income investing as a weakness.
That said, the manager stresses that many of the funds he managed at Gartmore had an income bias, even though they were predominately growth-focused vehicles.
"Of the 200 stocks in the Gartmore Growth Opportunities portfolio, for example, around 70 were income generators. Of all the funds I have managed, this is the most similar to the Diverse Income Trust," he added.
Williams managed the Gartmore Growth Opportunities investment trust from 1993 to 2010. It merged with the Artemis Alpha investment trust in September of last year, following the manager’s resignation from Gartmore.
He managed the Gartmore Fledgling Trust from its launch in April 1997 to September 2010. While Williams was manager, the fund returned 337.93 per cent to investors, outperforming its IT UK Smaller Companies sector average by more than 148 per cent.
Performance of trust vs sector over 14-yrs
Source: Financial Express Analytics