Aegon has launched a new multi-asset income fund targeting retirees in the wake of Chancellor George Osborne’s pensions shake up.
The Aegon High Income fund, run by Kames Capital, is fully invested in the £236.6m Kames Capital Diversified Income fund that invests across the globe in equities, bonds and listed property and up to 30 per cent in alternative strategies.
Soft launched on 26 February, the Aegon High Income fund has posted a 5.3 per cent yield to the end of July and is unconstrained to a benchmark.
The underlying Kames fund was launched the day before the Aegon fund.
It has a total charge of 0.7 per cent.
Aegon investment director Nick Dixon says three critical retirement trends have developed which drove the creation of the fund.
“First, retirement increasingly marks the start of more flexible working arrangements rather than the end of working life,” he explains.
Also, people want more control over the pension capital accrued over their working life.
“Thirdly, with rising longevity and low gilt yields, there is increasing need to develop investment options which offer both income and the potential for capital growth,” he adds.
Kames Capital fund manager Vincent McEntegart manages the fund.
With the poor interest rate environment ensuring inflation is constantly eating away at savers’ pots, a regular income has become a necessity, he says.
“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,” he says.
“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.”
The fund has an equity bias toward financials, where many insurers and a few banks offer attractive dividends, he says.
“We are also invested in listed real estate funds mainly in the US, Europe and Asia which are providing income from rents on commercial property,” he continues.
“Closer to home we have invested in UK-based supersize warehouses which act as distribution hubs for large retailers. These facilities, many of which contain state of the art automated technology, are central to many large retailers’ plans for centralising their distribution.”
Equipment leasing is another area of value, he adds.