Powerful fund combination from Friends Provident International

Friends Provident International (FPI) announced today the launch of a new protected fund that is exclusively available through its range of Friends Provident International Limited (FPIL) regular savings and investment bond products.

The 80% Global Growth Protector Fund, seeks to generate unlimited returns from a dynamically managed basket of equity assets whilst simultaneously offering an explicit protection level against down side risk, using fixed interest and deposit investments.

The fund is backed by the powerful combination of BlackRock and HSBC and provides an exciting combination of growth and protection with a high emphasis on the developing equity markets.

The fund has an initial bias (30%) towards the Asian-Pacific region or asset classes/sectors benefiting from the Asian growth story making this an ideal investment for clients who want to share in the dynamic growth potential of the region. The remainder is diversified globally in more developed markets.

In a strong equity market climate, the fund can be up to 100% invested in equity assets to deliver attractive performance, without sacrificing the high level of protection. In poor equity market climates, the cash exposure is automatically increased via the CPPI mechanism.

The protection mechanism is driven by the Constant Proportion Portfolio Insurance (CPPI) technique:

This systematic approach ensures that the fund unit price does not fall below 80% of its highest ever value. The protection is open-ended meaning that investors are not tied to a fixed investment term so offering greater flexibility to investors.

For added peace of mind, HSBC Bank plc also ensures that the Fund value never falls bellow the 80% floor.

All decisions are outsourced to the highly experienced Multi-Asset Portfolios Strategies Team (MAPS) at BlackRock.

The Fund Mechanics in detail

The dynamic asset allocation is driven by a 3 stage process:

At Level 1 the fund gains exposure to equity assets via BlackRock retail funds. These are mainly equity-based and are selected on a best of breed basis from their wide stable of high quality funds.

At Level 2 longer strategic and shorter term tactical asset allocation decisions are implemented, offering investors exposure to a multi-asset and globally diversified portfolio.

At Level 3 the fund benefits from dynamic re-balancing between equity assets and bonds/cash cash to provide the additional layer of protection.

Fund Availability and charges

The 80% Global Growth Protector Fund is available as a direct collective fund via the FPIL Reserve Bond and has an annual management charge of 1.2% p.a.

An FPIL mirror fund is also available called the Global Growth Protector Fund and has an additional administration charge of 1.2% p.a. The 80% protection mechanism is applied to the underlying collective only.

Both funds are available in US Dollar share classes. Other product wrapper related charges will apply.

Commenting on the launch, Jim Henning, funds marketing & research manager at FPI said:

“This exclusive new fund is a welcome addition to our rapidly evolving investment proposition. It is a protected fund concept that has been designed to offer investors unlimited growth potential with the added spice of high emerging markets exposure but not losing the other essential ingredients of risk control and flexibility.”

Commenting on the design of the fund, Colin Graham, head of relative return strategies within the MAPS team at BlackRock said:

“We are delighted to be selected to run this exciting new fund for FPIL. Our high level of expertise and experience with CPPI based fund strategies has generated a very strong track record.”