Allianz Income and Growth has delivered good returns over the past three years to maintain a 7% income yield, but…

I’m apparently getting comments from agents, bank representatives, to the effect that I don’t know what I’m talking about, that this is a ‘I don’t know how many billion dollar fund’ and that I should stay on my own path.

Well, I wrote the article in May 2023, so let’s take a look at the returns for 2023, 2024 and YTD through the end of 2025. I will focus more on the returns in USD, so I refer more to their share class AM USD Dis and AMg2 USD Dis because of the currency, but also because of the lower fee (at 1.50% per annum)

Most people were lured into Allianz Income and Growth because of the income, but income is also part of the return. My friend told me that they actually write/sell options to increase income returns and that should be part of the total returns, you see.

Per Allianz site, here you will find Allianz’s total income and growth returns:

• 2023: 17.29%
• 2024: 9.94%
• 2025 (end of Oct): 10.60%

I want to see if the fund composition is still 33.3% in all three cases:

I think it’s still there, even though they have quite a bit more money.

Since the fund is actively managed and owns almost 33% of each of these funds, we can only gauge whether they have outperformed a portfolio consisting of the following index ETFs:

Here are the performances over the time frames I mentioned:

They continue the performance from my last article by sitting under a composite portfolio like this.

I guess you could argue that it’s easier for you to invest in one fund and you can’t invest in these three ETFs in your SRS account.

Well, I think people overestimate performance, if we look at it through the right lens.

I also updated the income distribution table in my previous article:

They have maintained their payout since May 2023, which is my last update.

If you buy the AM USD class today, the applicable income split will be equal 7.75%.

I always find it strange that people pressure me with an income strategy based on the Safe Withdrawal Rate Framework (SWR), because:

1. The natural income distribution of a broadly diversified portfolio is lower than normal.
2. They don’t like to sell units. It’s as if your capital has disappeared.

But you’re pretty much okay with something with a natural yield that might be lower.

Here is the 12-month rolling return of the underlying asset:

1. IWB: 0.97%
2. HYG: 5.76%
3. ICVT: 1.75%
4. Return if it concerns a composite portfolio: 2.8%

You’re okay with paying something like 7.75% of something with a natural income distribution of 2.8% and don’t wonder how that’s sustainable.

If you want to know how much Allianz will pay out your distribution from the natural distribution and from the sale of the capital, you can Google “Allianz SG Dividend Composition” and you should get this Fund Literature page. And you can find this document Composition of the fund dividend.

You can see that the AM USD, AMg2 USD has an underlying portfolio return of 2-3%, which shows that I am not far off.

To help you avoid looking at what the column means here, here’s the detailed explanation:

1. Distributable income: Interest + dividend income + net realized gains a fund receives from its portfolio, payable to you after deducting fees and expenses.
2. Capital:
   • Net unrealized gains (gains – losses)
   • Net distributable income accrued at the end of the financial year BUT is NOT DECLARED and paid out immediately as dividend on the next distribution date
3. Underlying portfolio return: an annualized version of #1 divided by unit price
4. Average payout yield: Simple average return of the annual dividend yield paid to shareholders since inception or the past 10 years.

Over the past 12 months, Allianz Income and Growth Class AM USD Dis pays 61% from capital and 39% from income.

Sometimes I die laughing when I think and think about how investors try so hard to sell units to get income, thinking it’s risky, but would ultimately end up in something like an Allianz Income and Growth.

Let me be clear: it’s not the manager’s fault.

In a sense, they created this, with such distribution because you like it. If you don’t like it, don’t fund Allianz Income and Growth to 55.8 billion. To be fair, not all share classes pay out this way.

In the SWR framework, I have shown empirical evidence that selling your securities to make a profit, rather than the natural dividend and interest income, does not mean that your fund/portfolio will run out of money prematurely.

It is:

1. How much you start withdrawing relative to your portfolio value.
2. How healthy is the systematic strategy you wrap around your investment, which is a move up when the markets are good and a step back when the markets are bad, relative to the value of your portfolio.

Obtaining income from capital is therefore not a taboo.

But you have to ask yourself: how much does the manager know about your individual income needs and how you feel.

Zero.

And so the fund manager ensures a generic distribution based on its own mandate/systematic strategy. I don’t know what that is. If you are the owner, it might make sense to find out.

But yes, convertibles have done quite well, not just this year, but over the last two years. While the fund didn’t outperform a composite portfolio that you can easily build at a lower cost, we can’t forget that the returns were good to keep income up.

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Kyith is the owner and sole writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, more solid wealth foundations, how to pursue a passive investing strategy, learn about investing in REITs, and the basics of active investing.

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Kyith worked as an IT Operations Engineer from 2004 to 2019. He currently works as a Senior Solutions Specialist at Insurance Start-up Havend. All opinions expressed on Investment Moats are his own and do not represent the views of Providend.

You can view Kyith’s current portfolio herewho uses his Free Google Stock Portfolio Tracker.

His favorite investment broker is Interactive real estate agentsallowing him to invest in securities from various stock exchanges around the world, at very low commission rates, without custody fees, near spot currency rates.

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