AJ Bell has launched two income funds targeting an annual yield of 4 per cent, with two different risk profiles.
The lower-risk AJ Bell Income fund aims to offer a 4 per cent income each year whilst maintaining the capital value of the investment.
To achieve this goal it will invest largely in government and corporate bonds from around the world.
The AJ Bell Income & Growth fund has the same income target, but also aims to grow the capital value of the investment in line with inflation - which currently stands at 1.8 per cent.
According to the platform this will be achieved by investing predominantly in ‘real assets’ such as equities and property. It won’t have any bond exposure, AJ Bell added.
In an announcement today (March 19), the investment platform stated the funds were designed for advisers and clients focused on generating a regular income from their investments, and would be suited for clients using income drawdown via their pension or taking tax free income from their Isa.
Both funds can be held via self-invested personal pension schemes, Isas and dealing accounts, and will pay income to investors monthly.
AJ Bell's current charging structure will apply – an annual management charge fixed at 0.15 per cent and an ongoing charges figure capped at a maximum of 1 per cent.
The offer period for the new funds is open until April 8, when the funds will go live. This enables investors to use either this year’s or next year’s Isa allowance to invest in the funds, the platform stated.
According to Kevin Doran, chief investment officer at AJ Bell, income generation is "a goal for a huge proportion of investors, particularly with interest rates remaining perpetually low and pension freedoms placing the onus on people to generate an income from their investments".
He added: "These funds give advisers and their clients’ two different options that target a 4 per cent income each year, whilst aiming to either maintain their capital or grow it in line with inflation."
maria.espadinha@ft.com
