ABN Amro has received approval from the FSA to run its six-strong range of Capital Protected Lifecycle funds in the UK market. Designed to offer clients a risk-averse option to meet future financial commitments, the funds will all have differing life spans with the maturity date segmented over five-year periods from 2010 to 2035.
As each fund approaches its maturity date, the underlying investments will reduce in risk in order to protect the portfolio, moving into cash, fixed interest and equity index derivatives. This means asset allocation varies for each vehicle - for example, the 2010 version will hold as little as 25% in equities while the 2035 could hold up to 85%. The guaranteed value at maturity could also rise as capital gains are locked into the fund.
"What we are offering is effectively a single packaged solution," said John Townley, director UK insurance at ABN Amro. "We've had the experience of running these funds in the shape of the euro-denominated versions since 2000.
"Most wealth now sits with the over-55s, many of whom have a number of financial obligations ranging from retirement to children's school-fees. This product offers them the flexibility to achieve that goal with peace of mind."
Added Lucien Garton, a global product specialist at the group: "The funds are built upon the three pillars of returns, security and flexibility, with the method behind them simple. All you do is choose a fund that matches up to an important date and invest towards that date."
Structured as a Luxembourg Sicav, each fund will carry an annual management charge of 1.25% and an initial fee of 5.25%. There is also a 1% charge on redemptions and switches. ABN Amro is expected to introduce versions of the funds in Asia and the US later in 2006.
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