Merrill Lynch has launched an institutional fund aimed at diversifying the risk of investing in the ...
Merrill Lynch has launched an institutional fund aimed at diversifying the risk of investing in the FTSE 100.
The KWS British Companies Fund invests in the top 100 UK companies but guards against concentration in the top companies by allocating an equal 1% weighting to each stock for its benchmark.
Fund manager Mark Wharrier said: "There is increasing concern about the absolute risk of the FTSE 100 among pension fund clients.
"In October the top three stocks represented over 22% of that index and, until now, the only way to balance this was to allocate more funds to international stocks or use a multinational index."
Wharrier added the aim of the benchmark was to ensure the fund has no more than a 5% weighting in any stock, more than 12% of the fund is in the top three largest holdings or more than 15% is allocated to any one sector.
The fund must also hold at least 50 stocks.
Wharrier said: "If you run a pension fund your true risk is not being able to pay scheme members when their benefits become due."
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till