"Fund management firms need to think about what we've relied on for these products in the past and now have to chase what the clients want," BTIM chief executive Emilio Gonzalez told InvestorDaily.
"That for me is the significant business decision [we've made] by having to come up with a solution for that."
BTIM had spent the last 12 to 15 months talking to financial advisers to get a better understanding of the new mindset of clients in the current environment, Mr Gonzalez said.
"It was very clear that clients had shifted their risk appetite, were no longer willing to accept high volatility and are very protective of their capital but also very much focused on generating income.
"We put our thoughts together [around] what product could we come to the market with that now starts to tap in to the new demands of clients and new appetite for income and low risk," he said, adding that funds which looked and felt like a corporate bond or savings account, but focused on income and low volatility, were now being favoured by investors.
In response to the shift, BTIM launched its BT Equity Incomes Series yesterday, targeted at baby boomers and retirees who were looking for daily liquidity without penalties, low volatility of unit price and potential for capital growth.
The BT Defensive Equity Income Fund targets a total income of 8.5 per cent, including franking credits, and the BT Balanced Equity Income Fund targets a total income of 10 per cent, including franking credits.
Their average exposure to the sharemarket was 30 per cent and 40 per cent, respectively.
Both funds were the first in the market to inform investors of the monthly distributions six months in advance, similar to a term deposit, Mr Gonzalez said.
"All unit trusts tell the investor the distribution after the event when you get your statement at the end of the year," he said.
"This is not outcome-based and is somewhat unpredictable, which was the feedback we were getting because investors want certainty and what to know their cash flow is going forward.
"This is bringing an important development on two fronts: recognition of having to adjust our product range for the structural shift in terms of client preferences, and two, the launch of a fund which is unique in a number of waves and will break new ground for the funds management industry."
Mr Gonzalez said there were products currently available that attempted to address the same shift in client investment attitudes but were "not hitting the mark and missing one or two key ingredients".
"They are still in the mindset of a unit trust where payments aren't as regular because a lot of these products were built for growth, not for income," he said.
"There's a permanent change in attitude and mindset; people are far more aware of the risk they are prepared to take on their capital. We've had to look at our product range and adjusted our products to reflect that."
The BT Equity Income Series is available on the BT Wrap and Asgard platforms or can be accessed directly.
BTIM is currently under discussions with research houses for ratings on the funds.
