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Scotia Diversified Monthly Income Fund Series A (BNS339)
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RBC Managed Payout Solution - Enhanced - Series A (RBF582)
I'm in search of a Low to Medium risk Monthly Income fund that will provide a an additional and reliable income stream for next 15 to 20 years with no legacy issue. The amount to be invested is $100,000 and I'm looking at taking out $600 per month for the next 15 to 20 years.
Q1. Of the two Monthly funds mentioned, which would you recommend and why?
Q2. Would you kindly recommend your best mutual fund idea for a monthly income fund?
Q3. Would the purchase of an annuity be a better option?
Thank you and I will await your sage recommendation for a Monthly Income Fund.
BNS339 has a since-inception return of 4.42% and fees of 1.46%. Right now it is 38% fixed income and cash. RBF582 has better performance (since inception 4.6%) but higher fees (1.83%). It is 56% fixed income. Neither is really that impressive with ridiculous fees for a conservative fund. Without a recovery in equity markets the performance hurdle indicated could be very hard to achieve ($600 a month is 7.2% on $100,000). We would side with BNS on the hope that its higher equity weighting will result in better long term returns. Both funds have had single calendar years of losses. We would prefer PMO205, rated 5-stars by Morningstar with a 6.95% 10-year return. Fees 0.86%. It may be a bit more volatile but over the timeframe noted we would not see this as an issue considering better potential returns. An annuity is very different and we can't say an annuity is 'better'. It depends on individual preferences, and risk profile. There is nothing wrong with annuities for investors who want totally guaranteed income and some tax benefits. Depending on one's age, the $600 requirement can be fairly easily met with an annuity at today's rates.