Global financial services group Nomura has launched into the UK retail market with a capital protect...
Global financial services group Nomura has launched into the UK retail market with a capital protected emerging markets fund of funds featuring 5% initial commission.
Domiciled in Dublin, the Global Emerging Markets 80% Protected Portfolio fund invests in six equally weighted products and has the ability to go to cash in cases of market volatility.
Garry Topp, director and head of fund sales at Nomura, said on day one, 100% of an investor's cash is allocated to the underlying funds and on a daily basis 80% of profits are locked in.
The lock-in protects 80% of the highest NAV to date, meaning if the markets have not risen the protected level will remain unchanged.
If the market falls, the protected level will also stay the same, with the floor rising in line with the markets.
As emerging markets is a notoriously volatile asset class, this could result in regular flows of money in and out of the underlying funds.
However, Topp said this would not result in unit-holders paying inflated fees because the portfolio would invest in institutional share classes and buy them at NAV.
Each of the funds is a Luxembourg-domiciled Sicav chosen for its long-standing track record and assets under management.
After quantitative analysis Goldman Sachs' Global Emerging Markets Equity Portfolio, Citigroup's CitiEquity Emerging Markets, Pictet's Emerging Markets Equity, Pioneer Investments' Emerging Markets Equity, Franklin Templeton Investments' Templeton Emerging Markets and WestAM's Compass Global Emerging Markets were chosen because they correlate in such a way that there is minimal duplication of regions and holdings.
At launch, the geographic asset allocation was 51% to emerging Asian economies such as Korea, Malaysia, Thailand and Taiwan, 16% to Latin America, 19% in EMEA and 14% in other areas such as China, Russia and Turkey.
The fund has sterling, dollar and euro share classes and minimum investment is 100 of the chosen currency for retail investors and 100,000 for institutional.
The portfolio carries an initial charge of 5% with an annual fee of 0.75% for retail investors and 0.15% for institutional.
Nomura to launch capital protected emerging markets fund of funds
80% of profits locked-in on a daily basis
Each fund to be a Luxembourg-domiciled Sicav
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