VanEck has released a new exchange traded fund (ETF), the Income ETF Model Portfolio, which aims to generate income of at least 2% per annum more than the consumer price index (CPI).
It would draw on Lonsec’s research and portfolio construction experience to provide recommended strategic asset allocations to yield income in an era of prolonged low interest rates.
The new model portfolio would offer a greater skew towards Australian equities versus global equities, due to historically higher dividend yields and franking credits.
Inside the global equities allocation, there would be a greater weighting to higher yielding stocks, as well as the portfolio including a greater weighting to higher yielding corporate bonds.
Arian Neiron, VanEck managing director and head of Asia Pacific, said investors were struggling to gain income from their investments as interest rates were likely to stay low.
"Asset allocation will be key in helping investors to achieve a decent income return, because it is no longer going to come from cash,” Neiron said.
“With interest rates at historic lows, Australia has caught up to the rest of the world in having ultra-low interest rates.
“That situation is not likely to reverse anytime soon, with another official rate cut expected in the next few months, so investors seeking income will need to allocate more to income producing equities and fixed income securities to achieve a decent return.”