Norwich Union is to add a new protected fund to its range of collective investment funds aimed at cautious investors.
- Fund is aimed at cautious investors concerned about stock market volatility
- It is the first fund to take advantage of the new FSA rules on use of derivatives in collective investments
Norwich Union is to add a new protected fund to its range of collective investment funds aimed at cautious investors.
The Norwich Active Protector Fund aims to provide long-term capital growth and protect the share price from falling below 80% of its peak level. It will be launched on 1 March 2005.
It is the first fund to be launched in the UK that meets new FSA rules governing certain aspects of the use of derivatives in investment funds. The rules will be introduced on 1 March 2005.
The Norwich Active Protector Fund has active and protected components. The active component delivers its return by linking to the returns from a mix of equity and bond funds. The protected component invests in short-term cash deposits. The manager will actively move investments between the active and protected parts of the fund in order to deliver the highest prospects 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 Norwich Union, said: "We believe this fund could be ideal for cautious investors who want an investment that is partly linked to equities but who are concerned about stock market falls and are looking for some degree of protection.
"Our research shows that there is a huge demand for products that allow investors to invest in the stock market while limiting the risk of being exposed to its volatility. Norwich Union already offers a range of protected investments across different product wrappers, and this fund adds another dimension to our portfolio of funds available through our collective investment products."
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Notes to Editors
About the Norwich Active Protector fund
The active part of the Norwich Active Protector fund will be linked to a range of Collective Investment Schemes. Initially the asset split of the active part will be 60% equities and 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 Fund Management.
The fund can be held in an ISA. The minimum is Ł50 a month and Ł500 for lump-sum investments into ISAs.
* The value of an investment in the fund can fall and the customer may not get back the amount invested. The protected price is provided through an agreement with UBS. If they are unable to meet the agreement, the customer may get less than the protected price.
Charges will be explicit and calculated on an annual basis. The initial charge is 5% and the AMC is 1%. The AMC will fall from 1% to 0.75% if 50% or more of the funds is invested in the fund’s protected component.
Norwich Union is the UK’s largest insurer. It is a leading provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 70% of the company’s long-term savings business.
Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.