Mutual funds are proven wealth-accumulations tools, and the fund industry hopes to build on that success and retain investors’ money with managed payout funds. The idea behind the funds is straightforward.
Here’s the description of Vanguard’s funds from its website: “Managed Payout Funds are innovative in that they have a “built in” systematic withdrawal plan (SWP).With a typical SWP, you’d have to construct a portfolio, set a spending level and withdrawal program, and monitor the portfolio over time. Because the SWP is built in to the Managed Payout Funds, you get professional investment management combined with a convenient payout strategy. A second unique feature of Managed Payout Funds is their three-year rolling average payout strategy, which can lead to a more consistent payout level than typical SWPs.”