Axa Investment Managers is introducing a 100 per cent capital-guaranteed structured product with performance linked to the FTSE 100 total return index.
The structure will enable the product to capture dividends as well as capital growth, negating one of the main arguments against investing in such products. Exposure to dividends will be obtained through investing in the swaps market.
The capital-protected fund series 2 will have an onshore Oeic structure and will offer weekly dealing at NAV.
The product has a six-year term and a lock-in feature aims to protect investors' assets. The lock-in will raise the minimum return that investors' will receive and is triggered by the market reaching certain levels at fixed dates.
The product will be available for Isas. Charges are fixed at 1.2 per cent of the original investment payable annually and commission is 3 per cent.
Axa IM has carried out research among its major IFA clients and designed the product to address their concerns. The firm is keen to provide greater liquidity and a constant proportion portfolio structure insurance to guard against any shocks that could send the markets into freefall.
Head of multi-manager Simon Ellis beleives that the CPPI model will be more commonly used as it offers greater protection against downward shocks in the markets.
He says: “CPPI-based products alleviate market-timing issues, as active asset exposure is adjusted automatically to changing conditions.”