Many investors, particularly those in retirement, are faced with a challenge. How do you maintain ready access to your savings and invest to receive a regular and predictable income that keeps pace with inflation, without eroding your capital base?
Achieving these investment goals is difficult - usually because they compete with each other, and this has only been made harder with today’s low interest rates and volatile investment markets.
Obtaining a predictable income often means accepting lower income, with limited or no growth;
Investing for growth, often means accepting less predictable income and increased risk; and
Insurance based solutions (such as annuities) can provide predictable income but often at low rates of return and at the cost of limited or no access to capital.
Investors are therefore left dealing with this problem by using a combination of the limited tools available and accepting the compromises that result, often without realising it.
Magellan FuturePay (‘FuturePay ’) has been designed to address this problem efficiently and effectively in a single investment product.
FuturePay aims to deliver investors four key benefits:
FuturePay is an innovative, new, listed, actively-managed fund which aims to deliver investors: a predictable monthly income that grows with inflation, driven by returns and capital growth, with a focus on downside protection. This is underpinned by a reserving strategy and on-going income support, together with daily access to capital.
FuturePay invests in a carefully selected portfolio of high-quality global companies that have the potential for attractive, long-term investment returns but are less volatile than the broader equities market.
Alongside FuturePay sits the Support Trust. Together with FuturePay , the Support Trust operates to provide a capital reserving and income support function. This is further supplemented by a MFG Reserve Facility. These provide FuturePay with potential income support during poor market conditions, to assist FuturePay in delivering its objective of providing investors with a predictable and growing monthly income stream, while reducing the risk of permanent capital loss.
Think about it like saving for a ‘rainy day’.
This combination of FuturePay ’s investment strategy, coupled with the Support Trust and a MFG Reserve Facility to provide reserving and income support to help manage volatility, all in a single product, is what makes FuturePay unique.
“Reserving is the unique feature of FuturePay. Once we understood the power and the benefits of reserving, we set about trying to think of what the best reserving strategy was.”
The desire to invest savings to receive a regular and predictable income (that keeps pace with inflation) is particularly true for those in retirement, who are now without a regular pay cheque.
Many retirees are left juggling the need to re-establish that regular PAY (to meet day to day living expenses) while ensuring they have enough savings left to maintain that income into the FUTURE, which is unknown.
FuturePay aims to provide a growing monthly income now and into the future, and so has the potential to enhance investing in retirement and retirement planning.
# as at 2 June 2021, growing at inflation quarterly
^ Income Yield is calculated daily: Target Monthly Income x 12 / estimated NAV
† The SUPPORT TRUST COVERAGE is the number of months over which the support trust could fund 100% of the Target Monthly Income of FuturePay and is calculated as the Net Asset Value of the Support Trust divided by the product of the number of Units on Issue and the Target Monthly Income