AMP Capital has changed the monthly distribution payments of its Income Generator to make the fund more accessible to a broader range of New Zealand investors seeking income.
Low interest rates globally have led retirees and investors in particular to search for investment offerings that will boost their income as traditional income sources, such as term deposits, have increasingly failed to meet their investment goals.
Previously, the Income Generator retained a portion of the fund's annual income to cover any Portfolio Investment Entity tax payable by investors by using a methodology that assumed all investors had a prescribed investor rate of 28 per cent.
Under the new methodology, AMP Capital will instead distribute 100 per cent of the estimate of the fund's annual income, apportioned on a monthly basis. Portfolio Investment Entity tax will instead be deducted at the fund's year end (31 March) or when investors redeem their investment.
AMP Capital New Zealand Head of Investment Strategy and Income Generator Portfolio Manager Greg Fleming said: "We understand that the biggest concerns facing many retirees and pre-retirees include how they replace their monthly salary and the fear they will outlive their money. This is why many investors seek a steady and reliable income stream to fund their living expenses; one that ideally provides enough capital growth to allow that income to grow with the cost of living.
"The Income Generator has proven to be an attractive option for these investors. We expect that changing the way we distribute its monthly income will widen its appeal not only to retirees who have been driving demand for income-based products in New Zealand but also investors on different tax arrangements such as iwi and charities who are also looking for consistent income distributions.
"Our previous methodology disadvantaged investors on a lower tax rate and they are often the clients with the greatest need for income.
We've listened to what our clients and prospective clients have told us and have made this change."
Income Generator aims to provide a regular and reliable income stream in excess of the prevailing average six-month term deposit rate (before fees) along with capital growth over the long term, by investing in a range of domestic and international yield-bearing securities, and with less volatility than the broader market. Its goal is to help investors mitigate against increases in the cost of living and give them line of sight on their income payments in a tax-effective way.
The new methodology for monthly distribution payments applies from 1 November 2017.
A Product Disclosure Statement for Income Generator (the Goals Based Funds Product Disclosure Statement) is available from the AMP Capital website www.ampcapital.co.nz/investing-with-us/goals-based-investing/income-generator-fund.The manager and issuer of Income Generator is AMP Investment Management (N.Z.) Limited, a wholly owned subsidiary of AMP Capital.
About AMP Capital
AMP Capital is a specialist investment manager with A$178.9 billion in funds under management as of 30 June 2017 and more than 250 investment professionals. AMP Capital has a heritage and strength in real estate and infrastructure, and specialist expertise in fixed income, equities and multi-asset solutions. It is a subsidiary of AMP Limited, which was established in 1849, and is one of Australia's largest retail and corporate pension providers.
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