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Premier dreams of halcyon days

Premier Asset Managements halcyon extra income fund is an Oeic fund of funds that is aimed particularly at older investors who may be looking for ways to fund their long-term care needs.

The fund was designed to appeal to clients of long-term care adviser Nursing Home Fees Agency, but is also available to the clients of the wider IFA market. The rationale behind it was that putting money in savings accounts will not provide high enough returns for older people if rising care costs need to be met.

However, the fund may also appeal to investors of any age who are looking for a relatively high income without excessive risk.

The fund aims for income of 4.5 per cent a year, with the potential for capital growth. It can invest in open-ended and closed-ended funds. UK fixed interest will comprise 70 per cent of the underlying portfolio, while the remaining 30 per cent will go into UK equities. Up to half of the fixed-interest element will be invested in high-yield bonds, while the remainder will be invested in index-linked bonds and investment grade corporate bonds.

Charges are an issue for many IFAs when considering funds of funds and one good feature of this offering from Premier is that the charges include an estimate of charges on the underlying funds. The large amounts of money that Premier will be investing with the underlying fund managers means it can take advantage of wholesale discounts on the charges which are not usually available to retail investors.

However, one potential drawback is that Premier takes its charges from capital. While this preserves income levels for investors, growth will be constrained which in turn could impact on the generation of future income over the long term.

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