New fund for retiree incomes

25 February 2019

Brisbane-based Pentalpha Investment Management announced it released a new retail class of unit in its Income for Life Fund at the start of 2019.

The fund was designed for investors seeking income distribution, the protection of their capital, and measured participation in long-term equity growth to mitigate the effects of inflation.

It would aim to return six per cent plus per annum and offer a higher yielding alternative to cash, term deposits and lower-risk interest rate securities than traditional equities, the firm said.

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According to Pentalpha’s executive chairman and head of investments, Denis Donohue, one of the biggest challenges for retirees in framing their future income streams was balancing risk and return.

“Pentalpha produces a ‘risk-managed’ target return rather than a performance outcome that is ‘relative to benchmark’ or otherwise independent of the total return,” he said.

In contrast to many market-linked equity income strategies, every component of Pentalpha’s total return is explicitly managed. At the end of the day, I manage the Fund as if it were my own, which is why I co-invest.

He stressed that the strategy aimed to deliver certainty by ensuring a defensive line of protection is set under every single investment in the portfolio.

“This safety net is always in place, with the cost of protection funded by forgoing a proportion of potential share price appreciation, but only that proportion above an agreed level not required to deliver within our absolute return target range. This is the key differentiator of the Fund,” he added.

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