Capital protected fund launches for retiree incomes


Denis Donohue

Brisbane-based Pentalpha Investment Management released a new retail class of unit in its Income for Life Fund at the start of 2019.

This follows the launch of the Foundation Class two years ago (now closed to new investors).

The Fund conservatively targets 6% plus p.a., offering a much higher yielding alternative to cash, term deposits and lower-risk interest rate securities which exhibit volatility characteristics more comparable to those of the Fund than traditional equities.

The Fund has been designed for investors seeking regular income distribution, the protection of their capital and measured participation in long-term equity growth to mitigate the effects of inflation. This makes it appealing to retirees, charities, trusts, foundations and family offices, including those transitioning into retirement.

Pentalpha’s capital protection strategy endured the “perfect storm” thrown up by the impact of the Royal Commission on many of the high dividend-yielding financial stocks in which the Fund may invest. Pentalpha has come out the other side and successfully managed its way through both the extreme volatility and negative performance experienced in many blue chip dividend stocks in 2018. It is following this testing experience that Pentalpha’s Executive Chairman and Head of Investments, Denis Donohue, is now more confident than ever that the time is right to launch the new retail Ordinary Class.

“One of the biggest challenges retirees face in framing their future income streams is balancing risk and return: how to live comfortably but also sleep well at night” said Mr Donohue.

“Pentalpha produces a ‘risk-managed’ target return rather than a performance outcome that is ‘relative to benchmark’ or otherwise independent of the total return. In contrast to many market-linked equity income strategies, every component of Pentalpha’s total return is explicitly managed. At the end of the day, I manage the Fund as if it were my own, which is why I co-invest,” said Mr Donohue.

“The strategy delivers certainty by ensuring a defensive line of protection is set under every single investment in the portfolio. This safety net is always in place, with the cost of protection funded by forgoing a proportion of potential share price appreciation, but only that proportion above an agreed level not required to deliver within our absolute return target range. This is the key differentiator of the Fund” said Mr Donohue.

The Pentalpha Income for Life Fund Ordinary Class is now available via platforms including Macquarie, HUB24, Netwealth, OneVue and PowerWrap.

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