Scottish Life International has launched its Safe Combination management system for its protected product range.The computer system, which covers SLI's 44-strong protected fund range, lets investors chose their own level of risk. Safe Combination will analyse growth and adjust risk levels according to how much protection the client wants. Investors can choose to change the division of their capital between full protection or higher levels of risk return on a three-monthly basis. Unlike most structured products, the capital is not locked in for a fixed - usually five years - term. SLI said this was the first such product to provide this level of flexibility.
Neil Lovatt, marketing development manager for SLI, said the company designed the system around risk psychology. Mr Lovatt said: "Investors in protected funds seem to follow the 'house money effect', whereby someone can enter a casino with GBP100, but does not want to take a punt on the lot. Two hours later, once he has won GBP600, he is prepared to put GBP100 on red, because it is the house's money."
He said the system would protect investors' initial investment in SLI's funds from day one. If the investment has risen slightly, and the investor is happy to take a punt on the profits, but keep the initial investment secure, the computer will move the investment into a more risky fund. The higher risk proportion of the scheme is invested in options, with the 100 per cent guaranteed section split 99 to 1 between cash and options. SLI estimated that the guaranteed portion would benefit from about 20 per cent of market increases.
The management charge is a 1.25 per cent, which is embedded in the protection rates. Entry charge and IFA commission varies according to the particular SLI protected product portfolio chosen. Safe Combination becomes operational on 13 December.
