BetaShares has been forced to defend it's Dividend Harvester Fund after it failed to achieve an "investable" rating.
The fund was the subject of a critical Lonsec report which criticised the "capital erosion" suffered by the product.
Returns from the Dividend Harvester Fund have remained modest; since 2014 there has not been a single year where shares in the fund have finished higher than where they started.
The Lonsec report said the fund "has yet to generate desirable outcomes for investors and therefore the current features of the product are considered insufficient to warrant an investable rating."
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In defence of the performance, BetaShares said: "The high yield of the fund can be advantageous in retirement portfolios, irrespective of whether the price decreases or not."
Speaking to Financial Standard, BetaShares chief executive Alex Vynokur argued: "It is a unique fund, designed specifically for retirees and pre-retirees to deliver a tax effective dividend that reduces equity volatility."
"Since its inception in 2014 it has met all its objectives, specifically the risk management strategy, it has reduced volatility by more than 34% and that is critically important to retirees."
The gross distribution yield over the past 12 months was 12%.
Vynokur said while the Lonsec report was not necessarily wrong, it has missed the point of the fund.
"For retirees the most important thing is cushioning on the downside. We believe that each of our funds are reliable and deliver on their objectives," he said.
"Lonsec has their own methodology and objectives and while it is fair to say returns were lower, it is an objective driven fund to reduce volatility and we have delivered on that."