BT Investment Management has launched a new series of equity-income products which the firm’s chief executive, Emilio Gonzalez, believes will compete with term deposits and hybrid issues for inflows among retirees and those approaching retirement.

The BT Equity Income series comprises two open-ended Australian equity funds, which target returns of 8.5 per cent or 10 per cent – including franking – monthly distributions known six months in advance and daily liquidity.

Coalface communiqué

“The product is the result of a lot of work and a lot of research among advisors on what their clients want at this point in their cycle,” Gonzalez told I&T News.

“I went out and spoke with a lot of fund managers at the coalface. They were saying that clients didn’t want risk or volatility; they wanted income and certainty for their future and their lifestyle.”

Gonzalez believes that with interest rates coming down investors – who have taken $20 billion out of the funds management industry in the last year  – are looking for a new type of investment.

He says that with a large demographic shift into post-retirement coming over the next decade, BT is positioning itself to manage the investments of people who have taken a lump sum from the super fund or are managing their super through a SMSF.

The researched product

“The retirement of the baby boomers will see around $1 trillion move into the post-retirement market in the next decade,” said Gonzalez.

“Up to now we haven’t created the right kind of products for this market, partly because we were living in different times in the equity markets, but this new series is seeking to address the need for reliable monthly income, with also potential for capital growth.”

BT has brought in two risk management specialists and two options traders to work on the two funds, the BT Defensive Equity Income Fund and the BT Balanced Equity Fund, which have total average exposures to the sharemarket of 30 per cent and 40 per cent, respectively .

“It’s like a car in that the buyer – the investor – will only know that it’s working and working well, and won’t necessarily know what’s under the bonnet, which is all the BT R&D,” said Gonzalez.

He did not rule out introducing further funds to the series with more market exposure, and more potential upside, down the track.


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