Opportunity for income focused investors to re-enter equity markets

Demand for income focused equity investments is set to increase in coming years as an ageing population recognises the need for regular income as well as capital growth during the pension phase, according to Suncorp/Tyndall managing director Brett Himbury.

Himbury said while demand for this type of investment has historically been ‘relatively low’, he believes demand is “emerging and will grow enormously”, as evidenced by the group’s research with platforms, dealer groups, advisers and investment researchers.

Tyndall is taking the cue and launching a new share income fund, which will aim to preserve and grow capital, but with a focus on income.

The Tyndall Australian Share Income Fund (TASIF) will give investors a tax-effective quarterly income stream of 2 per cent per annum over the dividend yield of the S&P/ASX200 Accumulation Index (grossed up for franking credits) over rolling five-year periods.

It also aims to provide long-term capital growth by investing in under-valued companies. The fund will be managed by the Tyndall intrinsic-value Australian equity team and will invest in companies such as ANZ and AMP, Himbury said.

The fund would be intentionally managed for income and tax effectiveness, with annual turnover of less than 40 per cent.

Himbury said this was “both the worst and best time to launch an equity product”. The cons include poor investor sentiment and inflows that are a fraction of what they have been in previous years, but the pro is that the market is throwing up some of the greatest investment opportunities seen in years.

The fund will open for investment on November 18, with a minimum investment of $50,000.