Article date: 16 February 2005
- Fund is aimed at cautious investors concerned about stockmarket volatility
- It is the first fund to take advantage of the new FSA ruleson use of derivatives in collective investments
Norwich Union is to add a new protected fund toits range of collective investment funds aimed at cautiousinvestors.
The Norwich Active Protector Fund aims toprovide long-term capital growth and protect the share price fromfalling below 80% of its peak level. It will be launched on 1 March2005.
It is the first fund to be launched in the UKthat meets new FSA rules governing certain aspects of the use ofderivatives in investment funds. The rules will be introduced on 1March 2005.
The Norwich Active Protector Fund has active andprotected components. The active component delivers its return bylinking to the returns from a mix of equity and bond funds. Theprotected component invests in short-term cash deposits. Themanager will actively move investments between the active andprotected parts of the fund in order to deliver the highestprospects for growth but also maintain the level of protection.However, there is still a risk to a customer’s investment.(See notes to editors*.)
Neil Davies, head of investment at NorwichUnion, said: "We believe this fund could be ideal for cautiousinvestors who want an investment that is partly linked to equitiesbut who are concerned about stock market falls and are looking forsome degree of protection.
"Our research shows that there is a huge demandfor products that allow investors to invest in the stock marketwhile limiting the risk of being exposed to its volatility. NorwichUnion already offers a range of protected investments acrossdifferent product wrappers, and this fund adds another dimension toour portfolio of funds available through our collective investmentproducts."
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Notes to Editors
About the Norwich Active Protectorfund
The active part of the Norwich Active Protector fundwill be linked to a range of Collective Investment Schemes.Initially the asset split of the active part will be 60% equitiesand 40% fixed interest. The underlying assets will be:
- 15% Norwich Union UK Equity Income,
- 10% Norwich Union UK Growth,
- 30% Norwich Union UK Index Tracking,
- 5% Norwich Union UK Smaller Companies,
- 10% Norwich Union Managed High Income Fund,
- 30% Norwich Union Corporate Bond Fund.
These funds are managed by Morley FundManagement.
The fund can be held in an ISA. The minimum is£50 a month and £500 for lump-sum investments into ISAs.
* The value of an investment in the fund can fall and thecustomer may not get back the amount invested. The protected priceis provided through an agreement with UBS. If they are unable tomeet the agreement, the customer may get less than the protectedprice.
Charges will be explicit and calculated on anannual basis. The initial charge is 5% and the AMC is 1%. The AMCwill fall from 1% to 0.75% if 50% or more of the funds is investedin the fund’s protected component.
Norwich Union is the UK’s largest insurer. It is a leadingprovider of life, pensions and investment products and one of theleading IFA providers. IFAs provide around 70% of thecompany’s long-term savings business.
Norwich Union has strategic alliances withbuilding societies and other leading UK brand names including TescoPersonal Finance and The Royal Bank of Scotland Group. NorwichUnion’s news releases and a selection of images are availablefrom Aviva's internet press centre at www.aviva.com/media.