AXA Distribution Fund
30 years of fund management experience
The AXA Distribution Fund is available through our Investment Bond which has a minimum investment of £5,000. The fund opened for business on Monday, 2 July 1979 and this year it celebrates its 30th anniversary.
Today it is the longest running fund of its kind.1 Over the years it has seen high inflation, zero inflation, double-digit interest rates, two boom and bust cycles in the domestic housing market and three economic recessions.
Why was the fund designed?
The fund was designed to isolate the dividend income and interest received by its underlying holdings in shares and government bonds. This is paid out to investors as ‘distributions’ twice a year, in May and November. Alternatively, investors could choose to reinvest the distributions.
A consistent investment solution for your clients
This is a consistent investment fund in the sense that it is unlikely to change its risk profile or asset mix in a hurry. If your clients want high risk investment thrills and spills, it isn’t the place for their money. The general principles that determine the selection of the AXA Distribution Fund’s shares has hardly altered since 1979. It's predominantly a combination of quality, blue-chip UK shares and UK government bonds.
For the bonds part of the portfolio, Index-linked gilts have long been a crucial part of the fund’s holdings. These are issued by the UK Government with the returns linked to movements in the Retail Prices Index. There are three investment principles that the AXA Distribution Fund has relied on over the past 30 years.
Stay balanced
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The general principle is that when shares do well, government bonds don’t. And when shares have a bad time, bonds may offer some shelter from the storm. From time to time there could be up to 60% shares in the mix, and vice versa. It all depends on investment conditions. |
| Buy quality |
The strategy is to buy and hold shares in profitable, well-managed companies with good balance sheets. Many of these are from the FTSE 100 index, the rest are quality, blue-chip UK shares selected from the wider UK stock market. The ‘buy quality’ principle extends to the Distribution Fund’s holdings in government bonds. |
| No u-turns |
This is self-explanatory. For 30 years we have stuck to the basics. We have not been diverted by investment gimmicks and ‘flavours of the month’. |
The AXA Distribution Fund ‘family’
After years of expertise in managing the Distribution Fund, AXA developed a range of different distribution funds for different purposes. Currently the following funds are available through our single premium investment bond:
- AXA Distribution Fund2
- AXA Defensive Distribution Fund
- AXA Ethical Distribution Fund
- AXA Deferred Distribution Fund
- AXA Global Distribution Fund
- AXA High Yield Distribution Fund2
Thanks to the experienced team of investment specialists who manage the funds, led by Jim Stride, there is currently more than £9 billion3 invested in AXA’s range of Distribution Funds.
How your clients could benefit
If your clients are looking for an income from their investment, the AXA Distribution Fund could work for them. It aims to provide:
- Twice yearly distributions in May and November 4, which aim to exceed interest generated by the highest rate building society accounts in the medium term (at least 5 years).
- Some capital growth.
The Fund is not appropriate for people who are looking to invest in the short term (less than 5 years). It is suited to people looking to invest for the medium (at least 5 years) to long term (over 10 years). They might have money saved in a bank or building society, and are looking for an alternative solution.
Building Society accounts may have benefits of security and benefits of easy access that this fund does not offer. In addition, Building Society deposits normally offer greater certainty of returns through interest earned.
The fund has a ‘Balanced Managed’ risk profile.
Your clients should know that AXA Distribution Fund’s capital value and distributions may fall as well as rise in value and are not guaranteed, so your clients could get back less than they invest, especially if they surrender in the early years. Of course, the fund’s past performance is not a guide to future performance.
Want to know more?
For more information, speak to your Business Development Manager, call Adviser Support Unit on 0845 0736661 or visit our AXA Adviser Extranet. You could also take a look at our product key features and special risks and charges guides which are available on request.
1 Source: www.morningstar.co.uk
2 Monthly distributions on these funds are available.
3 Source: www.financialexpress.co.uk figures as at 1 July 2009.
4 Please note that monthly distributions can be taken from the fund.