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Ian Hooper, Progeny Asset Management

Progeny aims for low cost ETF income solution


This week saw the launch of a multi-asset ETF solution for retail investors from Progeny Asset Management.

The Optimised Passive Income 60/40 is designed for investors who wish to have exposure to a range of global asset classes and a target yield of 3 per cent a year but with modelled annual drawdown in any 12-month period, not expected to exceed 7 per cent. 

Progeny writes that this will be implemented via exposure to up to 14 industry-leading iShares ETFs.  The solution will be available via financial advisers only, not direct to clients.
Optimised Passive Income 60/40 is expected to allocate around 60 per cent globally to equities, private equity, property, and around 40 per cent to global fixed income.

Ian Hooper, Director of Progeny Asset Management says: “We looked at the market and said there is a feeling that a new product would be cost sensitive so we wanted a product that was priced competitively.”

Total expense ratios on income funds tend to be higher but the ETF route allowed a lower TER and a good yield.

“Psychologically, 3 per cent was the level at which clients wanted to achieve a yield while taking a medium level of risk, particularly as the base rate has been at historic lows,” Hooper says.
Having set the parameters and chosen the iShares they wanted to include, Progeny left iShares to work on the optimisation and back testing of the product.
 
Progeny is revealing three of the iShares used in the product: iShares Sterling Corp Bond 0-5yr UCITS ETF; the iShares FTSE 250 and the iShares MSCI Quality Dividend.
 
The new income product is only available through intermediaries, including the independent intermediary business within Progeny.

“We would like to launch others once we see how successful this first launch is,” Hooper says. “We are certainly already looking at the next version and are hopeful of making subsequent launches.”

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