AIG Life has added the AIG Life managed income fund to its range of unit-linked multi-manager funds, bringing the number of funds up to five.
The new fund is available through AIG Life's pensions and investment bonds. It aims to provide a balanced income-orientated portfolio with a target yield of between 1 per cent and 2 per cent above the Bank of England base rate. The current estimated yield is 5.25 per cent.
The fund invests in externally managed funds that are already included in AIG Life's Active Access range. These are the funds that AIG already regard as the best of breed and this will help with the construction of a multi-manager portfolio, as AIG will have been monitoring the funds for some time.
Top 10 holdings in the AIG Managed Income Fund currently include New Star Property, Aegon Extra Income, M&G High Yield Corporate and Legg Mason Strategic. The underlying portfolio will contain up to 20 per cent in equities and between 80 per cent and 100 per cent in fixed interest, property and cash.
When selecting funds for the portfolio, the investment strategy of each fund will be examined in relation to the investment market and the fund's specific sector. Past performance of the fund and the track record of the fund management group will also be considered. The funds will be compared to their peer groups and AIG Life will meet the managers of the underlying funds to gain a better insight into how they work in different market conditions.
Another aspect of the selection process is looking at how factors such as volatility and investment style of each fund correlate with the other funds AIG Life wants to include in the portfolio.
The addition of this fund brings more choice to investors in AIG pension and bond products, particularly income seekers who are fairly cautious. However, as with all funds of this type, the charges levied on the underlying funds could make the fund expensive. AIG Life has tried to remedy this by charging a performance fee if the fund is top quartile and rebating charges if it is bottom quartile, but the charges on the underlying funds still remain regardless of performance.