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You are here: Home / Investment News / Incoming Devon product hits the retail shelves

Incoming Devon product hits the retail shelves

February 28, 2016

Slade Roberton: Devon portfolio manager
Slade Roberton: Devon portfolio manager

Devon Funds Management has launched a new product aimed at the burgeoning demand for income in a low-yield environment.

The Devon Diversified Income Fund follows on the back of similar successful product issues in the space by fellow NZ boutiques, Mint and Milford.

From inception in April 2010, the Milford Diversified Income Fund has grown to almost $1.2 billion as at the end of January while the similarly-named Mint income product has accrued about $75 million since its launch less than two years ago.

In a client release, Devon says it built the new fund “because the world we live in today is one which is characterised by low growth and low inflation”.

The corresponding low interest rates on bank deposits has forced many investment income-reliant clients to search for higher-yielding but risk-controlled options, Devon says.

“This is an issue that many of you have spoken to us about and one which can cause great frustration given the ever increasing importance of investment income,” the note says.

The fund, which officially launched on January 1 this year, splits investment duties between Devon (via its Dividend Yield Fund), for the equity component, and JB Were Asset Management covering fixed income.

“One of the most important lessons that we, as a firm, have learnt over our many years of investing is that the best risk adjusted outcomes always come from ensuring that our people focus on our strengths while outsourcing those responsibilities for which we don’t posses a competitive advantage in,” the Devon note says. “…We believe [appointing JB Were] will ensure that we are constantly aware of the best investment opportunities available in this asset class and can optimise risk control.”

JB Were is also Devon’s global equities investment partner. Goldman Sachs sold down its approximately 20 per cent shareholding in JB Were this January, leaving the National Australia Bank as the sole shareholder in the wealth management group.

The fully-hedged new Devon product has a flexible investment strategy allowing it to hold cash or fixed income in a 0-100 per cent range while restricting equities to 0-40 per cent of the portfolio and high-yield credit up to a maximum 10 per cent.

However, the current investment strategy targets 60 per cent fixed income, 25 per cent in equities, 10 per cent cash, and 5 per cent high-yield credit.

The Diversified Income Fund, managed by Devon’s Slade Robertson, has a $2,000 investment minimum with a capped management expense ratio of 0.9 per cent (including a 0.65 per cent management fee). Distributions will be paid quarterly, the Diversified Income Fund fact sheet says.

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