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Hi,
I am thinking about investing in the BT Balanced Equity income series offering 7.5% plus franking.
My understanding is that the risk is low as they only invest in the ASX 200 and cover the index with a put to ensure the fund is not severely impacted with a substantial correction.
Are you able to advise if this is:
A. low risk
B. a good investment for income verses a term deposit
C. any other risks I haven’t thought through.
I appreciate your insights.
A: Thanks for the question.
I wrote about this product last year. My concerns at the time were to do with BT’s then investment performance, and the management fee.
Over the last 12 months, BT has lifted its game and the performance has improved.
According to their last performance report (end May), the fund’s performance since inception is spot on with its benchmark.
It is important to note that the benchmark is only 40% shares, and 60% bank bills.
Accordingly, the fund only returned 9.36% (total return) in the year to 31 May, compared to around 17% for the S&P/ASX 200.
In answer to your questions, I think it is largely a sound investment. It is not low risk – however, it is lower risk than an outright investment in the sharemarket.
Regards
Paul Rickard.
