Hearts and Minds Investments (ASX:HM1) said it is expanding into a broader Hearts & Minds Group with the establishment of a new management company and plans to launch HM2, a diversified global income fund investing with leading international credit managers, according to a Wednesday filing with the Australian bourse.

The restructure is expected to lower the company's management expense ratio to a target of 1.30% from 1.50%, with further reductions anticipated as funds under management increase, per the filing.

HM2 is targeting annual returns of around 10%, a running yield of more than 8% and lower fees, while continuing the group's philanthropic model through annual donations, the filing said.

The company will allocate around AU$2 million from this year's donation to help establish HM2, with the board anticipating that the broader platform will ultimately boost overall funding for medical research in Australia, the filing added.

The investment company's shares were up nearly 1% in recent Wednesday trade.