Architas has unveiled the first funds in a new suite of capital protected solutions, launching two multi-manager products offering 70% and 80% downside protection on the highest ever NAV.
The Architas Multi-Manager Diversified Protector 70 and 80 funds aim to provide a combination of growth and protection by shifting allocations between a diversified basket of mainly equity funds, called ‘risky assets’, and group of money market instruments or bonds, dubbed ‘lower risk assets’.
Diversified Protector will seek to provide a share price at least equal to 70% or 80% of the highest NAV achieved since the launch of the fund by actively managing between the asset mixes. The closer the share price moves downward towards the protection floor, the greater the proportion of lower risk assets held.
The UK-domiciled open-ended funds will not make direct investments in property or commodities and investment in alternative assets will be restricted to Ucits funds.
Architas head of product development Dawn Kendall says the protected umbrella has been totally developed within the Axa group, with Axa IM backing the protection element on the funds.
She says development of the suite has been driven by demand for products under a protected umbrella from both Axa’s tied agents and the wider wealth management market.
“One of our strengths is the intellectual property we have at the group,” she says.
“We have the experience and strong track record in running fund of fund portfolios, while we are good at managing protected investments here in the UK and in mainland Europe.
“One criticism of protected products, which operate in unregulated markets, has been lack of robustness. We took our time getting them to market because we wanted to ensure we had a strong process in place which was future proof.
“These funds are in an Oeic structure and are Ucits compliant, with a transparent fee structure.”
Unlike many similar products in the UK retail space, the funds blend passive investments with active equity funds from across the wider market, not just those within the Axa stable.
The Diversified Protector funds currently hold four underlying equity products, with just the Axa IM Distribution vehicle coming from the group.
“We wanted to build a pure blended fund of funds portfolio and we believe the best way of doing this was to not just use index-based or totally passive products,” she adds.
“We believe by utilising active products with passive strategies we can produce strong alpha generation over the long term.”
Kendall says the open-ended Diversified Protector funds will be followed by a similar tranche-based product later in the year.
