The Managed Income Service invests in two asset types: lower-risk defensive assets to deliver income and higher-risk growth assets intended to increase the portfolio value over time.
It rebalances quarterly with the lower-risk portfolios intended to deliver income in the early years, while volatile equities are put to work over a longer period to capture long-term growth and address longevity and inflation risk.
The high-risk assets mirror the DIM’s existing model portfolios rated four to seven (moderate to high risk), which consist of primarily active funds, diversified across geographies and asset classes. Over a five-year period the portfolio gradually migrates to be fully invested in the model portfolio that matches the client’s risk profile.
The Managed Income Service has a 0.75% management fee through Thesis or 0.3% via platform.
Thesis director of marketing and business development Lawrence Cook said they’ve received feedback from advisers that there are a lack of products to meet client needs when it comes to investing for income rather than for accumulation.
“Investors face a number of risks as they reach the age of retirement and can access their pension pots. Volatility, inflation, longevity and sequencing risk can all have devastating effects on portfolios, so it is vitally important that products and services are available to help people plan their finances throughout retirement,” Cook said.
He added: “Rather than capture all the movement of underlying markets, [the Managed Income Service] is designed to reduce the exposure to the riskier assets early on, and give the portfolio a better chance of delivering income over the long term.”
Parmenion touted itself as the first DIM to create a decumulation product with its Guardian drawdown portfolios launched in May 2016.
Copia launched decumulation products using iShares ETFs in March 2017.
