VanEck launches income ETF model portfolio


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.”
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.