Henderson Global Investors has brought in the Henderson managed income plan, a portfolio management service that provides access to an actively managed range of Henderson fixed-interest funds and an equity income fund.
The plan aims to deliver a yield of 7 per cent gross a year by investing in the institutional share classes of eight Henderson funds including the corporate bond fund, high yield bond fund, UK gilt fund and index linked bond fund.
Although the yield is 7 per cent, investors are free to take fixed monthly or quarterly income of up to 10 per cent a year, quarterly income at a variable rate dependent on investment performance, or they may reinvest it for growth. Investors can change their income arrangements at any time.
The product was developed because investing in a single bond fund cannot meet the needs of all investors in all market conditions. An actively managed portfolio can move across funds in line with changing economic conditions, while balancing the need for high income and the preservation of capital.
Fixed-interest is popular with investors who are fleeing from volatile stockmarkets and demand is also coming from Sipp investors and pension trustees, with companies such as Boots moving their pension schemes entirely into bonds.
However, if interest rates rise as expected, opportunities are more likely to be found within the high-yield bond funds and Henderson will need to ensure the underlying investments can sustain the target yield. Also, the ability to take regular income of up to 10 per cent a year ensures flexibility, but the higher income levels may result in capital erosion.