Skandia unveils protected Shield fund

Skandia has launched a multi-asset risk-targeted protection fund which will limit losses to 80% of the highest ever share price.

The Shield fund is linked to a basket of sixteen different UK and international asset classes and a cash holding.

Asset allocation of the investments held in the basket will be controlled to remain within a volatility target of 8%, equivalent to a risk rating of four out of 10 on Skandia's risk scale (10 being the highest risk).

In addition, the fund relies on a separate derivative to provide the downside protection, rather than cash.

Skandia says this means the fund will always retain its exposure to the underlying portfolio, allowing it to benefit when an upturn occurs.

The fund been developed in conjunction with and is managed by Commerzbank, a German retail and investment bank, which provides the derivative contracts.

However, Skandia controls the asset allocation whcih is based on the system it uses in its Global Dynamic Equity and Diversified funds.

The Shield fund has a total expense ratio of 0.9% and is only available on the Skandia Investment Solutions platform.

Skandia head of proposition Graham Bentley says: "Recent stock market volatility has rocked investor confidence and we believe there is demand for a protected product which avoids the pitfalls and inflexibility of many structured funds currently available.

"This new fund is daily traded with daily protection so investors are not locked in for a set term and it has a clear volatility target and risk level so people can understand whether it is aligned with their own attitude to risk.

"It is very competitive on cost and investment returns will be linked to total returns of the underlying portfolio, including dividends, which is uncommon in the structured products market."