Tasmanian retirees are being warned to beware unknown risks as they chase higher investment returns in the low interest rate environment.
Tasmanian Perpetual Trustees said it was seeing Tasmanian retirees increasingly turning to higher yielding income funds for their savings, including its Select Mortgage fund, which was a type of managed income fund.
General manager of wealth management Craig Mowll warned not all managed income funds carried the same level of risk and that some retirees attracted by high headline returns might be taking on unknown risks.
He suggested retirees make sure they were comfortable with where they were putting their nest eggs.
Mr Mowll said managed investments were not bank accounts or term deposits and had a different risk profile.
"There are ways retirees can get a better return on their hard earned dollars," he said.
"However, before an investor dives in and gets attracted by an appealing headline rate, they need to make sure they review the product's investment strategy, asset allocation, risk profile, track record and the manager's reputation."
Tasmanian Perpetual Trustees said mortgage funds pooled money from private investors and lent it as mortgages on residential, commercial and industrial property.
The funds paid regular incomes to investors, after fees, costs and charges.
It said the sector had grown by 60 per cent nationally in the past year.
That took funds under management in the sector to more than $10 billion.
"Thousands of retirees in Tasmania are in search of income options from their existing savings and investments in a low interest rate environment," Mr Mowll said.
"While lower interest rates are good for those with variable rate mortgages, it potentially makes life hard for Tasmanians living off their retirement savings.
"The strong interest in managed income funds is being driven by a combination of the higher yield, regular income and Tasmanian Perpetual Trustees' long-term track record in managing credit risk and the trust in our brand."
He said Tasmania had the nation's oldest population and the company estimated Tasmania had more than 100,000 retirees.
Mr Mowll said Tasmanian retirees were living longer and were healthier and more active.
He said people needed to plan for retirements which could be longer than 20 years.