Schroders to launch Secure Distribution
More on Multi-Asset Funds
In focus: Outsourcing Investments
Schroders is launching a Secure Distribution fund to cater for investors who want to accumulate wealth for the next 10 years and then receive a fixed income for another decade.
The fund bears some similarities to a ‘lifestyle’ product, which switches from one investment allocation to another depending on investors’ priorities over different periods.
Over the first 10 years, the fund’s manager and head of portfolio solutions John McLaughlin will first invest in a multi-asset portfolio run by the group’s head of multi-asset investments Johanna Kyrklund, as well as cash and cash-like instruments.
Then the fund will pay out a further decade of returns equivalent to 7.5 per cent a year of the fund’s highest net asset value over the first 10 years.
The quarterly payments will be made on a drawdown basis, which means they will not incur income tax.
At the end of the two decades the fund will also make a lump sum capital payment.
The 7.5 per cent annual payments will be protected via the use of a structured product-style derivative deal struck after the first 10 years.
James Rainbow, Schroders’ head of UK marketing, said the product was “innovative” and the first of its type in the company’s stable.
He said its unit trust structure would be familiar to advisers and investors.