Skandia has launched its first structured product under Philip Bastiman, who joined the firm's international asset management arm, Skandia Investment Group (SIG) from RBS this autumn, charged with developing a structured products capability for the firm's various distributions. Skandia businesses globally, both retail and institutional, are likely to be watching the new product's asset raising and performance with interest, said a spokesperson.
Skandia Shield is an open-ended, daily traded multi-asset fund with a target volatility of 8% and 80% highest share price protection. The firm called it 'unique' in the capital-protected fund space, partly because the product is not path dependent: downside protection is derivative-based, rather than using a CPPI type mechanism. The underlying indices are also total return indices, and Skandia said the fund is the first protected fund on a platform to have an unbundled total expense ratio as low as 0.9%.
"We believe there is demand for a protected product which avoids the pitfalls and inflexibility of many structured funds currently available," said Skandia UK's head of proposition, Graham Bentley. The firm's research shows over half (54%) of its surveyed equity investors are less confident about investing in equities than previously. When asked about the prospects of the stock markets over the next five years, nearly 30% thought they would rise in value.
Skandia Shield was developed in conjunction with Commerzbank, which manages the assets. Asset allocation is based on a model provided by SIG, which models the risk and return characteristics of the assets monthly to achieve the highest possible return within the target risk. The assets are UK equities, Russian equities, US equities, UK government bonds, Eurozone equities, US government bonds, Japan equities, German government bonds, Australia equities, US liquid investment grade corporate bonds, China equities, US aggregate investment grade bonds, India equities, US liquid high yield bonds, Brazil equities and emerging market bonds.
Skandia ended its long-running Protected Portfolio Investment series of tranche products in May and in September announced the addition of a structured products capability within SIG. A spokesman said that since the firm launched its PPI products, the focus of the UK business had become firmly aligned with its developing platform Skandia Investment Solutions.
Skandia Shield is available exclusively via that platform and can be held in its pension, onshore bond, offshore bond and unwrapped collective investment accounts. The fund is daily priced and traded. Skandia expects to attract institutional as well as retail money.
This product is available now in Recent Additions (UK).