Second provider launches retirement income fund

Aegon has launched a new high income fund designed to help investors take advantage of the new pension flexibilities, which come into force in April 2015.

The Aegon High Income fund is managed by Kames Capital and will be available across all Aegon’s advised propositions.

Up to 30 per cent of the fund can be invested in alternatives, and it will invest in a mix of income-producing assets, including investment grade and high yield bonds, UK and global equity, listed property and specialist income investments.

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The fund is unconstrained by a formal benchmark.

Aegon said it anticipates that many people will start drawing income from pension savings before they fully retire and will use new income flexibilities in retirement. It sees income, with potential for capital growth, as a “key investor requirement and Aegon has launched its High Income fund to meet these needs”.

Nick Dixon, investment director at Aegon, said: “There has been a lot of discussion about the new products that will be introduced off the back of the government’s reforms and, while we expect new innovation, high income solutions based on a diversified asset mix are likely to prove very popular.”

Vincent McEntegart of Kames Capital and manager of the Aegon High Income fund, added: “A regular income is a key requirement for many investors, particularly those approaching, or in retirement.

“Interest rates in the UK remain at historic lows and inflation continues to erode the wealth of cash savers. When it came to annuities, people were interested in the level of income that was being promised to them, not how their money was being invested.

“We expect this to change as people increasingly access their money through drawdown and take on some investment risk with a view to sustaining their savings. Many people can expect their retirement to last thirty years or more and if you think about the extent to which the world has changed over the last three decades, people need to take a long-term view about how they invest their savings.”

Aegon’s new launch marks the second launch in a potential wave of providers launching new retirement offerings.

Legal and General yesterday launched a new fund aimed at investors looking to draw down income from their retirement pot.