Magellan has launched a listed, actively managed, retirement income fund that will aim to provide monthly income from a low-volatility portfolio, which also offers a reserving strategy for each investor in the fund.
According to Magellan, which unveiled the fund today, FuturePay will hold a portfolio of high-quality, low-volatility companies listed on securities exchanges around the world that the manager believes can deliver risk-adjusted returns over the medium to long term, while incorporating a reserving strategy that provides monthly income that grows with inflation.
Speaking at the launch, Magellan distribution general manager Frank Casarotti noted the exchange-traded fund would also offer daily liquidity of capital and the fund was unique in that all its features were available in a single product.
“It ticks a few boxes we would argue. Having said that, there is no silver bullet here, but we believe this offer will be appealing to investors in the retirement income space,” he said, pointing out the reserving strategy was a mutual model that took advantage of rising markets to provide income support in falling markets.
Addressing the question of why investors should use the fund instead of other Magellan products, head of retirement solutions and data science, and FuturePay portfolio manager Paddy McCrudden also pointed to the bundled features of the new product.
“[Using a mix of the Magellan global fund and infrastructure] provides you with the portfolio solution, but not the other features, including the regular fixed distributions and the reserving. That can be done by yourself if you are capable and have the right solutions, but you will struggle to do the mutualisation feature, which is the ability to pool reserves with other investors to get a more efficient outcome,” McCrudden said.
The fund will go live from 2 June and will be traded on the Chi-X Australia securities exchange under the FPAY code. It will be accessible through the exchange or directly from Magellan. The targeted monthly income will be 2.03 cents per unit at inception with an income yield of 4.24 per cent.
