The Voya Global Target Payment Fund is specifically designed for retirees and investors close to retirement who are interested in earning stable, monthly payments from a fund that’s also diversified globally and offers good growth potential.
Investors are increasingly seeking better returns on their capital as opposed to trying to grow it in retirement, said Paul Zemsky, portfolio manager of the $250 million fund and chief investment officer of Voya Investment Management’s Multi-Asset Strategies and Solutions group, and “though annuities were a valuable source of income, with interest rates so low, the available returns are not terribly high.”
At the same time, a portfolio designed specifically for growth didn’t seem particularly appealing to retirees either, Zemsky said, “which is why we wanted something in between that offered growth opportunities but also delivered a stable dividend each month.”
Since its inception in 2008, the Voya Global Target Payment Fund has always met its stated 6% dividend. Zemsky credits that track record to both the balance between asset classes—equities and bonds—as well as the portfolio’s geographical breakdown between different markets, including developed and emerging international markets, Europe and the United States.
The Voya teams finds the best global investment opportunities by generating long-term forecasts for major markets around the world to determine just how correlated they are and will be to each other, since the value of diversification lies in markets that are not correlated to each other. Then, “we put those estimates into a proprietary model and use our own judgment to make sure that whatever we’re investing in makes sense for our shareholders,” Zemsky said.
To ensure continued returns as well as deliver growth, the Voya Global Target Payment Fund invests in a good mix of dividend paying assets like U.S. value stocks, high yield bonds and emerging markets equity. The portfolio is typically broken down into 60% equity and 40% bonds, with a 40% exposure to international markets.
Currently, the fund is underweight emerging markets equity, although it still values the benefits of diversification that emerging market debt offers, because “those stocks still need to digest some changes,” Zemsky said.
Over the longer term, of course, the global growth differential will favor emerging markets, but right now, it’s been a challenge for most emerging market companies to convert growth into profitability, Zemsky says, “and whether it’s because of infrastructure bottlenecks, a limited supply of skilled workers or inefficiencies in their economies, many emerging market companies have not been as profitable as companies in the developed world—though I believe that once those bottlenecks are eliminated, things will change and emerging market companies will become more profit focused.”
The Voya Global Target Payment Fund also just reduced its overweight in the core European countries because the management team was disappointed by the lack of action by the European Central Bank (ECB).
“The Federal Reserve is just so much more accommodating than the ECB so we felt we just couldn’t maintain our overweight in Europe anymore, and we removed that money and brought it back to the U.S.,” Zemsky said.
Prior to joining Voya, Zemsky spent 18 years at JPMorgan Investment Management, where he held a number of key positions, including Head of Investments for over $300 Billion of fixed income assets. He also co-founded CaliberOne Private Funds Management, a macro hedge fund.
Zemsky co-manages the Voya Global Target Payment Fund with Frank van Etten and Derek Sasveld.