An actively managed fund, with unlimited upside potential but with 80% protection. A fund whose management technique is normally only available through a structured product, but now, via CSM Ltd and Hansard International, is available for both Lump Sum and Regular Premium Plans.


The Global Protected Active Allocation Fund is an open ended fund designed to provide investors with protected participation in the growth potential of global stockmarkets via a combination of actively managed funds and cash whilst limiting the downside.

Key points are:

Fund Manager: UBS Global Asset Management
Protection Provider: UBS AG (London Branch)
Sub Fund Advisor: Merrill Lynch Investment Managers

The initial allocation to the basket of funds will be 100%

As the basket of funds rises in value the protected fund will increase its exposure to the basket of funds
As the basket of funds falls in value the protected fund will decrease its exposure to the basket of funds in favour of cash

The maximum exposure to the basket of funds will be 100%. In adverse conditions the minimum equity weight could be zero

The return of the Fund will therefore reflect three factors:

–Dynamic allocation between basket and cash
–Performance of the basket
–Prevailing interest rates

Provide investors with protected participation in the growth potential of stockmarkets via a combination of actively managed funds and cash.

Provide investors with a minimum redemption value of 80% of the highest NAV (Nett Asset Value) over the life of their investment (or put another way never put more than 20% of their capital at risk at any one time).

Allow investors to benefit from the flexibility and transparency provided by an open-ended, daily priced mutual fund.

Invest in a dynamically managed basket of MLIM equity funds and cash, using the CPPI approach, to:

–Provide maximum exposure to the performance of the underlying funds
–Trade at a minimum value of 80% of the maximum NAV achieved at any point in time.

The capital protection is afforded by two mechanisms,

- the protected fund employs a mechanism called CPPI (Constant Proportionate Portfolio Insurance) which is essentially a system which takes feeds from a number of leading market indicators such as equity markets, inflation, interest rates to produce an allocation across equities and cash within the fund.

- In addition, UBS and Merrill Lynch have entered into a swap agreement which essentially means that if the CPPI were to get the allocation slightly wrong UBS would have to make up the difference.

Volatility is low by comparison to a standard equity fund as only 20% of the highest NAV is at risk.

The following historical scenario analysis has been prepared to show how the Fund would have performed, net of fees, in both a
falling and rising market scenario.

The analysis uses two five year periods to demonstrate this

● December 1993 to December 1998 – this period being representative of a generally rising market
● December 1998 to December 2003 – this period being representative to a generally falling market

 

The Global Protected Active Allocation Fund can be accessed through the Capital Builder Plan
 


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