ClaringtonFunds Inc. on Wednesday announced the introduction of the Clarington Diversified Income Fund. As a complement to Clarington’s existing income funds, the fund will invest primarily in corporate bonds, high-yield bonds, income trusts and dividend-paying equities.

According to Clarington, the fund may also make allocations to convertible and real return bonds, structured notes and covered calls.

The fund is designed to provide a monthly distribution of 5¢per unit and will be launched with a net asset value of $10 per unit. Any additional income generated in the portfolio will be distributed annually each December. It is expected that a portion of the distribution will be made up of capital gains, interest, dividends and/or a return of capital, which would provide greater tax efficiency to investors.

“Income is an important focus of many investors’ portfolios and there are many opportunities to earn conservative, attractive income beyond traditional asset classes. It was with this objective that we designed the Clarington Diversified Income Fund,” said Eric Frape, Clarington’s Vice President of Product Management.

KBSH Capital Management Inc. of Toronto will manage the fund. Of the $7 billion KBSH currently manages, $2.5 billion is in fixed- income securities. “We believe that this unique combination of corporate bonds, high-yield bonds, income trusts and dividend-paying equities will provide investors with a flexible, well diversified portfolio that will deliver consistent distributions over many years and all stages of the business cycle,” said Peter Pennal, president of KBSH Capital Management.