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IOOF launches new defensive portfolio

In an effort to target lower volatility and higher income yields, IOOF MultiMix Investments has launched a new defensive equities portfolio.

IOOF portfolio manager Dan Farmer said in a statement that the decline in cash and bond yields has meant income needs to be sought elsewhere.

“We believe that a specially constructed equity market exposure will allow us to address this,” said Mr Farmer.

“Due to the volatility of equities, not too much exposure can be taken within the more conservative funds. This is because higher yield comes at a price, in the form of higher risk.”

The statement said many managers feed defensive equities into their balanced portfolios as part of their mainstream Australian equity exposure, irrespective of the risk profile of the different balanced portfolios.

The volatility and uncertainty of share markets through the global financial crisis led to a greater focus on dividend yield as potentially a more secure source of return, it added.