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AXA launches high-income retirement portfolio
AXA has launched an income generating product aimed at people heading into retirement who are focused on maintaining a regular income rather than building wealth
The Income Generator is targeted at people with a zero or low tax rate, such as people on an allocated pension, who can use the portfolio to complement their pension income.
The product, which will be managed by AXA subsidiary ipac, aims to return a consistently higher yield than the cash rate plus capital growth.
The current income estimate for 2010-11 is 5.7 per cent after investment fees and franking credits, so an investment of around $400,000-$500,000 can provide a useful complementary income, according to ipac chief investment officer Jeff Rogers
“The industry has had an accumulation mindset but this product focuses more on returns rather than capital gains, hence it focuses on high dividend equities, especially Aussie equities. It also benefits from franking dividends, with less focus on unhedged global equities,” Rogers said.
The Income Generator is a market-linked multi-asset portfolio with an income bias. Assets within the portfolio are managed by specially selected managers with tailored mandates to identify income producing opportunities.
Income Generator payments will be distributed 13 times a year, with income distributed monthly plus one annual payment of capital gains that will be invested back into the portfolio.
The product was a better long-term option than term deposit investments, which don’t offer protection against unforeseen circumstances such as unexpected inflation, Rogers said.
The Income Generator is more likely to be recommended as an alternative to AXA's recently released North Protected Retirement Guarantee product than used in conjunction with it.
“It hasn’t been developed with reference to North at all. It’s been developed with the idea that retirement is about income not wealth, so let’s focus on income. There are parts of each asset class where the asset delivers in income as opposed to capital gain,” Rogers said.
While the North Protected Retirement Guarantee features a balance sheet guarantee, the income generator is yield focused with no guarantee, so it should return a higher yield, Rogers said.
AUTHOR
Mike Taylor
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