Financial services firm Russell Investments said it is looking to launch a new multi-manager income fund, as it expects high dividend-paying strategies to become more appealing to investors.
The group said it would examine launching a fund that will combine “several unique” income-focused strategies in a diversified portfolio.
“Income-based strategies are likely to become more appealing to investors as companies restore their dividends and come under increasing pressure to pay out their cash piles,” Russell Investments portfolio manager Scott Bennett said.
He said income strategies will be particularly useful for self-managed superannuation fund investors as they begin implementing their transition-to-retirement strategies.
“With corporate balance sheets being restored, dividends are returning to normal and overall yields are competitive against term deposits,” he said.
“This reporting season saw an increase in dividends for the first time in 12 months, with the majority of companies delivering dividends in line with or better than market expectations – a welcome relief from the previous two reporting seasons where many companies cut their dividends to conserve cash.”
During 2008 and 2009, Australian companies raised over $110 billion, according to the Australian Securities Exchange.
Australian firms had 6.5 per cent of their assets in cash as at 30 June 2010, according to Macquarie Group.
In May, Russell Investments launched its High Dividend Australian Shares exchange-traded fund.
Earlier in the year, Legg Mason Australian Equities launched a new Australian equities yield strategy designed to deliver a sustainable and growing dividend stream while seeking capital growth.
“We hear from superannuation funds that there is a dearth of products that cater for their members in the retirement phase,” Legg Mason Australian Equities chief investment officer Reece Birtles said.
“We have developed this yield strategy to assist those funds to deliver the most appropriate strategies for their members.
“Australia’s demographic make-up is changing rapidly, with the bulk of baby boomers moving into retirement phase.”
