Alternative balanced fund for retirees

AXA has launched an alternative balanced fund for investors approaching retirement looking to draw down on their investments, which will be available to advisers through the Generations platform from April 2006.

AXA chief investment officer Mark Dutton said the new fund provided a hybrid of liquidity and high growth, but took a different approach to other such funds with less exposure to equity market risk and less long-term fixed interest strategies.

Dutton said the fund held market neutral and hedge funds to reduce the reliance on equity market exposure for high growth, and took an alternative fixed interest approach, which resulted in less exposure to duration risk.

The fund uses short duration fixed income products and portable alpha strategies to put returns above Australian bank bill rates. It is fully hedged into Australian currency and therefore has no exposure to currency risk.

Dutton said the fund used a value management approach for its equity portfolio that would provide a margin for safety over the long-term as markets fluctuated, although he admitted this may lead to underperformance compared with other investment styles in growth markets.

He said the fund would suit people going into a draw down phase where capital would be withdrawn, without compromising long-term outcomes.

Ipac financial advisers have been using the product for several months but AXA head of investments Elizabeth Foley said it would not be rolled out to the wider advice community until April this year.