Axa Isle of Man has added the evolution extra income fund to its unit-linked fund range for the evolution and estate planning bonds.
The fund fits in at the lower end of evolution's risk spectrum and consequently it is likely to produce modest returns. It aims to provide income and preserve capital by investing entirely in the Axa extra income Oeic which in turn invests in sterling fixed-interest securities, with some exposure to high-yielding UK and European equities. The underlying fund was established in 1990 and its current holdings include Standard Chartered Bank, France Telecom and DaimlerChrysler.
The mix of bonds and equities provided by the underlying fund could be appealing to cautious evolution and estate planning bond policyholders that are taking their first steps back into equities after recent volatility.
Some investors may also like having the best of both worlds within a single fund link. When stockmarkets are performing well, the equity element of this fund is likely to boost performance compared with pure fixed-interest funds with no equity content. Similarly, the fixed-interest element may provide refuge from volatile equity markets, particularly during a downturn.
However, in the current economic environment the tide seems to be turning in favour of equities so this fund's performance and its appeal to investors may start to falter as the trend accelerates.
According to Standard & Poor's, the Axa extra income fund is ranked fourth out of 26 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over five years to August 4, 2003.