RBS makes first foray into retail fund management

The Royal Bank of Scotland (RBS) is making its first foray into retail fund management with the launch of cautious managed and balanced managed portfolios.

The RBS Volatility Controlled Cautious Managed and Volatility Controlled Balanced Managed funds will invest across equities, bonds and commodities, among other asset classes, and will be managed using a quantitative-based model by a six-strong investment team.

Cautious Managed aims never to exceed 10% annual volatility, while Balanced Managed aims to maintain volatility between 10% and 15%. At launch the Cautious fund will have 54% in equities, 40% in bonds, 5% in commodities and 1% in property equities.

Balanced will have 71% in equities, 14% in bonds, 10% in property equities and 5% in commodities.

The group has been back-testing the funds for ten years to ensure volatility remains within the target range.

Steven Brown, the head of intermediary sales, says the bank has no plans to add an active managed vehicle to its stable because the degree of risk would not suit its investment process.

“A more adventurous risk profile, above the balanced level, did not align itself with the methods we were using. There are plenty of risky investments available, and unfortunately there are plenty of investments in the sector we have looked at that are significantly riskier, based on the recent market conditions we had, than the end investor anticipated,” he says.