CitiFirst, the retail structured product division of Citigroup, is launching its first open-ended fund aimed at the UK IFA market - an autocallable structured product based on the FTSE 100.
The UK Autocall fund offers the potential for annual returns up to 9.25% along with a level of capital protection. In addition, the fund's assets are fully collateralised by G7 sovereign debt.
For the first five year investment cycle, CitiFirst expects the autocall barrier to be 100% of the FTSE 100 starting level and the protection to be 50% of the starting level.
The UCITs III fund does not payout to investors but reinvests any returns into a new autocall strategy.
Emma Davidson, director and head of UK retail structured product sales for CitiFirst, the full service model for structured investment solution, says the fund addresses many adviser concerns.
"The IFA community has been through a lot this year, with the demise of various plan managers, many changes to the regulatory environment, preparing for RDR, concerns about counterparty diversification within client portfolios, the list goes on," she says.
"To overcome that we decided to use the UCITs III mechanism which allows you to get rid of the credit risk altogether and is one of the most regulated platforms in the world."
Davidson says the fund already has investments worth £10m but needs to double this before its official launch, scheduled for February. She expects the product to be available on all platforms and is in advanced negotiations with Cofunds.
The UK Autocall fund is the first in a suite of UCITs III structured products Davidson plans for the UK market.
The Company established its Dublin-domiciled UCITs III platform in 2006 and has already sold $2bn of UK structured products through its offshore preferred share vehicle Symphony.
The fund is open for subscription with a minimum investment of £10,000 and subsequent investments of £1,000. There is no lock-up on investments and redemptions can be made daily. The fund has no bid-offer spread and the AMC is 0.90%. Commission of up to 3% is available for IFAs.
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