In late 2024, we changed how the income payments from the AJ Bell Income and AJ Bell Income & Growth funds are made. It means that you’ll get a smoother level of income over the course of a year. But how does this work in practice?
We choose to pay out the income monthly, to help you plan your own personal finances and cash flows. A process, called ‘income smoothing’, aims to make this process easier by making the monthly payments more predictable.
Rather than pay all the income that the fund receives from its underlying investments each month, we will set a sustainable level of monthly income. This means that for 11 months of the year you should receive an income that is broadly the same, and then any excess income generated over the year will be paid out at the end of the accounting year.
The funds have an accounting year finishing at the end of March and by nature are not allowed to carry over any income from one accounting year to the next, which means that all income received must be paid out by the end of March. This is an important feature of ‘income smoothing’ and means the end of year payment will always be different from the other months.
The income payments are declared at the end of each month, sent for processing and deposited in your account at the end of the following month. That means the final year end payment will land in your account at the end of April.
While we have made changes to how the income payments are made, the core income objectives for the funds remains the same; to achieve a 3-5% income yield over a trailing three-year period.
‘Smoothed’ represents the payments expected to be made as a percentage of the fund Net Asset Value (NAV) and is not guaranteed. Year end payments are subject to how much income is accumulated over the course of the year.
We hope you find this update useful. The AJ Bell funds aren't a personal recommendation. We don't give investment advice, so you should talk to a (suitably qualified) financial adviser if you're not sure where to invest. Past performance is not a guide to future performance and some investments need to be held for the long term.
Written by:
James Flintoft
Head of Investment Solutions
James has over a decade of experience running MPS and managed accounts for intermediaries.
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