AJ Bell today launches two new income funds, each targeting an annual yield of 4%* but with two different risk profiles and growth objectives. The funds are designed for advisers and clients focused on generating a regular income from their investments and are expected to be particularly popular with people using income drawdown via their pension or taking tax free income from their ISA.
The lower-risk AJ Bell Income fund aims to offer a 4% income each year whilst maintaining the capital value of their investment. It will do this by investing largely in Government and corporate bonds from around the world.
The AJ Bell Income & Growth fund also targets a 4% income per year as well as aiming to grow the capital value of the investment in line with inflation (currently 1.8%). It will do this by investing predominantly in ‘real assets’ such as equities and property. Unusually for a multi-asset income fund, it will have no bond exposure.
Both funds can be held via SIPPs, ISAs and dealing accounts and will pay income to investors monthly.
The funds will have the same charging structure as AJ Bell’s other funds, with AJ Bell’s Annual Management Charge (AMC) fixed at 0.15% and an Ongoing Charges Figure (OCF) capped at a maximum of 1%. As with its other funds, AJ Bell will be aiming to keep underlying investment costs as low as possible and reduce them where it can as the funds grow in size. The fixed AMC and capped OCF structure means any cost savings will automatically benefit investors and AJ Bell anticipates that the OCF will be less than 1% when the funds go live.
The offer period for the new funds is now open until 8 April 2019, 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.
Advisers can submit applications for clients online now via AJ Bell Investcentre.
Kevin Doran, chief investment officer at AJ Bell, comments:
“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. These funds give advisers and their clients two different options that target a 4% income each year, whilst aiming to either maintain their capital or grow it in line with inflation.”
Asset allocation
AJ Bell Income
|
International bonds |
42% |
|
UK Government bonds |
15% |
|
UK Equity |
15% |
|
UK Corporate bonds |
10% |
|
Europe ex-UK equity |
5% |
|
Pacific ex-Japan equity |
4% |
|
Emerging markets equity |
4% |
|
Infrastructure |
3% |
|
Cash (and equivalents) |
2% |
AJ Bell Income and Growth
|
UK Equity |
30% |
|
Property |
20% |
|
Pacific ex-Japan Equity |
13% |
|
Technology equity |
10% |
|
North America Equity |
7% |
|
Emerging Markets equity |
7% |
|
Europe ex-UK equity |
6% |
|
Infrastructure |
5% |
|
Cash (and equivalent) |
2% |