Psigma Investment Management has introduced a new Cautious Income strategy for investors to meet the need arising from the pension reforms.

The cautious model portfolio service (MPS) strategy aims to deliver 2% above inflation with an estimated yield of 3%. Its total expense ratio (TER) would be a maximum of 1.35%.

The strategy seeks to generate defensive returns through diversified investments with a maximum weighting in developed and emerging market equities of 30%.

The fund, which has an annual management charge of 0.5% plus VAT, will be available on Transact, Ascentric, Aviva and the Fusion platforms.

Frank McGarry, director of sales and marketing at Psigma, said: "We have designed this new cautious income strategy to meet the need arising from the pensions revolution and it should also help our clients generate a healthy income in a yield-starved world.

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"We are happy that our dynamic investment approach and focus on risk both protects portfolio returns when markets are falling and delivers strong performance in rising markets," he added.