Progeny Asset Management, the investment management arm of the Progeny Group, launched a multi-asset exchange-traded fund (ETF)for investors seeking efficient upside exposure and yield.
The Optimised Passive Income 60/40 is designed for investors who want exposure to a range of global asset classes and a target yield of 3 per cent a year, but with modelled annual drawdown in any 12-month period, not expected to exceed 7 per cent.
This will be implemented through exposure to up to 14 iShares ETFs.
The offering will only be available from financial advisers, not direct to clients.
Optimised passive income 60/40 is expected to allocate about 60 per cent globally to equities, private equity, property and about 40 per cent to global fixed income.
The fund takes its inspiration from modern portfolio theory, the brainchild of Nobel Prize-winning economist Harry Markowitz.
It purports to show how investors can construct portfolios to optimise or maximise expected returns based on a given level of market risk; understanding that risk is an inherent part of higher reward. Based on expected demand, Progeny said it is likely to launch a suite of similar solutions in the future.
Winterflood Business Services, a division of Winterflood Securities , provides the custody and dealing services.
Provider view:
Ian Hooper, director of Progeny Asset Management, said: “The whole Progeny ethos is customer-led. We know investors and their advisers need diversified upside exposure and yield, but also wish to understand downside risks.
“We worked closely with key industry players to design this solution, based on a diversified range of ETFs that give efficient exposure to assets across the globe. Progeny looks after the fund selection, the market exposure is provided via a suite of iShares. Winterflood Business Services provides custody and trading.
“With an all-in fee of below 1 per cent, Optimised Passive Income 60/40 offers a straightforward growth and yield solution that investors can tuck away for the long term, knowing that if they should need their money it can be raised quickly, as the ETFs are liquid and traded on exchange.
“It is designed to meet the demands of investors seeking an income from their assets in a climate of lower interest rates. It can also complement more complex, bespoke portfolio structuring.”
Adviser view:
Patrick Connolly, head of communications at Chase de Vere, said: “There are many multi-asset funds available and an increasing number are using passive investments, as there is an ever-greater focus on charges.
“We are unlikely to use this new offering. The charges aren’t particularly competitive and most of the investment advice we give is on an ongoing basis, where we build client portfolios ourselves using what we consider to be the most suitable underlying funds.”
Fees/charges:
All in fee below 1 per cent.
Verdict: These types of funds are more likely to be suitable for long-term buy-and-hold investors and for use by advisers when giving one-off advice without regular investment reviews.
It might not appeal to advisers actively involved in managing their client’s portfolios.
