GIP is a single premium immediate annuity that provides a guaranteed regular income for a selected term of one to 50 years.
Challenger sets the income rate at the issue date and it remains fixed for the term.
The income payment comprises interest and may also include a return-of-capital component if an investor elects to have all or a portion of their capital returned as part of the periodic payments.
"Currently, the interest rate by investment term is in a narrow range from 6.39 per cent to 6.79 per cent," S&P fund analyst Rodney Lay said.
"We view GIP is a possible alternative to a term deposit. However, with one to five-year term deposits offering comparable returns with lower risk, the shorter-term GIP offering appears uncompetitive.
"We believe the product is best suited as a longer-term investment."
