In an effort to attract clients who wish to invest into low risk schemes, Investors Mutual and South Australian based friendly society Lifeplan have launched a joint fund which will use an equities and bond/cash approach.
In an effort to attract clients who wish to invest into low risk schemes, Investors Mutual and South Australian based friendly society Lifeplan have launched a joint fund which will use an equities and bond/cash approach.
Administration of the fund will be handled by Lifeplan while Investors Mutual will cover the investment management leveraging off their relationship with funds re-search and advisory group Valu-Trac.
The aim of the SmartBond product, says Lifeplan managing director Chris Wright, is to offer a friendly society style bond to investors who are wary of risk or of lower net worth.
At the same time Lifeplan and Investors Mutual are also relying on the tax effec-tive nature of the fund, which has all the tax paid internally at concessional rates, removing any issues about imputation credits or capital gains to appeal to inves-tors.
“The target market for this type of product is the ‘mums and dads’, which is the tra-ditional area for friendly societies with capital guarantees but returns under five per cent,” Wright says.
Investors will be able to invest in either global or the Australian share market with the product automatically switching the asset allocation from shares to cash and bonds to protect against market corrections.
“This type of product will fit well into the range of products a financial planner of-fers as it allows the planner to service lower net worth clients without a lot of work,” Wright says.
“Planners are losing the low end to the banks, who are probably too conservative with their investment approach, so this allows planners to compete head to head even though they don’t have the same resources.”
Wright estimates the product will attract about $25 million in funds for the remain-der of this financial year, mainly due to the new status of the fund, but believes within three to five years funds under management should be around $100 million.
