JP Morgan Fleming Asset Management has launched a five year protected product linked to the returns ...
JP Morgan Fleming Asset Management has launched a five year protected product linked to the returns of a basket of in-house funds.
The Dublin-based closed ended company, the JPMF Capital Protection Global Growth, will give returns linked to the performance of six portfolios.
The product, which pays up to 3% initial intermediary commission, offers investors 75% of the total return on the mix of the underlying funds. The split between the funds is 41% in Premier Equity Growth, 30% in Global Fixed Interest, 12.25% in European Growth, 10.5% in US Growth, 3.5% in Japan Growth, and 1.75% in the South East Asia Fund.
JP Morgan Fleming calculates the total return as 75% of the difference between the average of the first 13 monthly valuations and an average of the last 13 monthly valuations during the five year period.
Ann Roughead, head of UK product development at JP Morgan Fleming Asset Management, said that 100% of the assets in the company are invested in medium term notes (MTNs). These are taken out with stable, high quality lenders such as the Skipton Building Society. They offer Libor (London Inter-Bank Offer Rate) plus a spread. This offers the capital protection, which would only fail if one of the lenders went bankrupt. The MTNs pay back at the end of the five-year life of the product.
The spread above Libor is used to pay intermediary commission and Flemings own costs. In addition it provides the funds for JP Morgan Fleming Securities, which uses assets on its own book to invest in the spread of six funds, to provide a hedge on this exposure.
JP Morgan Fleming Asset Management earns its margins from the assets placed in its funds by JP Morgan Fleming Securities. There are no explicit initial or annual charges on the product and minimum investment is £3,000 lump sum. An Isa option is available and maximum investment is £7,000. The offer period is between 22 October and 5 December. Roughead said: 'What we are offering is protection not a guarantee. For money not to be returned, any of the AA-rated issuers would have to go insolvent over the next five years.'
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