AJ Bell has launched two income funds which have been designed for advisers and clients focused on generating a regular income from their investments.
The company believes the funds will be “particularly popular” with people using income drawdown via their pension or taking tax free income from their ISA.
Both funds will target an annual yield of 4 percent but will have different risk profiles and growth objectives.
The lower-risk AJ Bell Income Fund will invest largely in Government and corporate bonds from around the world.
The AJ Bell Income & Growth Fund aims to grow the capital value of the investment in line with inflation (currently 1.8 percent). It will do this by investing predominantly in ‘real assets’ such as equities and property but 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 percent and an Ongoing Charges Figure (OCF) capped at a maximum of 1 percent. 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 funds will go live on 8 April 2019.
Kevin Doran, chief investment officer at AJ Bell, said: “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 percent income each year, whilst aiming to either maintain their capital or grow it in line with inflation.”
Asset allocation
AJ Bell Income Fund
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 Fund
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%
|
AJ Bell is one of the UK's largest investment platforms, with 204,400 customers and £44.2 billion of assets under administration.