Plato a fund of wisdom for retirees
Plato’s Australian Shares Income Fund has won the Lonsec/Money Management’s Fund Manager of the Year Award for best Retirement Product Innovation for 2013.
Lonsec said the fund manager’s focus on optimising returns for zero per cent tax-paying clients was a unique feature within the retail product space.
“The manager has been able to design an equity income product that is highly tax efficient for those investors, and free from many of the structural biases that are present in some other equity income funds,” Lonsec said.
Approximately 5.3 million Australian baby boomers will move into retirement over the next 15 years, highlighting the need for appropriate retirement strategies.
Fund managers are required to navigate the ‘new normal’ – volatile investment markets and lower return expectations – and provide income solutions for a growing number of retirees.
Managing money for retirees requires a completely different approach, according to Plato managing director Don Hamson.
Its Australian Shares Income Fund viewed tax management as an important income generator in terms of total return.
Hamson said the fund’s focus on franking credits and above-benchmark returns ensured retirees generated a decent income. It returned 10 per cent last year compared to 3-4 per cent cash rates, he said.
“Australian equities are one of the highest yielding asset classes around the world at the moment, but we’ve added about 4 per cent above the yield on the Australian market when you include franking credits,” he said.
Pengana’s Australian Equities Fund was also short-listed by Lonsec.
Its focus on the preservation of capital lent itself to investors that were slightly more risk averse but still wanted exposure to growth assets, it said.
“The Pengana Australian Equities Fund aims to enhance and preserve investor wealth over a five-year period via a concentrated core portfolio of principally Australian listed securities,” Pengana said.
Its disciplined investment process focused on active investment, with a constant focus on absolute positive returns and an ability to invest in cash.
A growing awareness of longevity risk was bringing annuities back into focus, according to Challenger chief executive of life, Richard Howes.
Challenger’s guaranteed annuity was also chosen by Lonsec as a finalist.
Howes said its Liquid Lifetime product was compelling because unlike traditional equities, it guaranteed income indexed to inflation and provided access to capital.
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