Baring Asset Management has launched a multi-asset income fund that targets an annual yield of 5 per cent with monthly distribution.
The Baring Multi Asset Income Fund aims to generate an annual income of 2.5 per cent above the income generated from a global equity market average as measured by the MSCI All Countries World Index, with the potential for capital growth for the medium to long term.
It will sit in the IMA Mixed Investment 20 per cent to 60 per cent shares sector.
The fund can have a maximum investment in equities of just under two-thirds of the portfolio, 80 per cent in fixed income, up to 30 per cent allocated to property, a quarter in cash and a maximum 30 per cent in alternatives.
The investment manager said the fund is suitable for those looking for retirement solutions in the pension freedoms environment.
The fund will be managed by Sonja Laud, who joined Barings in August last year having managed five global equity funds during her five-year tenure at Schroders, which ended in December 2013.
REACTIONS
Provider view
Sonja Laud, head of Multi Asset income at Barings, said: “As income from traditional sources is under pressure, investors need to accept higher levels of risk for the same level of income in single-asset class funds.
“This is why we will tactically adapt and diversify the asset allocation of the portfolio, aiming to gain exposure to rising asset classes in order to capture growth, and limit exposure to falling asset classes in order to protect capital, while opportunistically exploiting income opportunities as they arise.
“For many investors, the question is where to find a retirement income solution that combines sustainable income generation with rigorous risk management. We believe Multi Asset income investing is the investment proposition that answers that.”
Adviser view
Marvin Evans, principal of Gloucestershire-based Old Bank Wealth Management, said: “Many providers are launching or have launched a multi-asset income fund with an attractive yield that pays bi-annually and even quarterly for investors looking for medium-risk portfolios.
“Five per cent is attractive for this type of investment. People tend to budget on a monthly basis so the monthly distribution could help investors work out their expenditure more easily.
“Overall it could be a nice investment for those who do not want to select a whole portfolio.”
Charges
Ongoing charge of 0.77 per cent for the F share class, and 0.92 per cent for class I (minimum investment £500,000).
Verdict
A lot has been said about an increasing demand for multi-asset funds. Here, the product is sure to catch the eye of pensioners in search of a new and relatively safe source of income following pension reforms. The prospect of a 5 per cent annual yield could whet their appetite further.
Where most funds offer annual and bi-annual income payments, Baring Multi Asset Income Fund’s greatest lure has to be its monthly distribution – which again could prove particularly popular with the new breed of pensioners. Ms Laud has managed many funds during her time with Schroders and DWS Investments. This will go some way to reassure investors that their money is in safe hands.
