Friends Provident is setting up a CPPI ethical fund with the equity component linked to its flagship Stewardship growth portfolio in a bid to attract disgruntled with-profits policyholders.
The Stewardship safeguard optimiser fund will be available through Friends' investment portfolio bond from June. It will be comprised of cash and the £545m growth fund, one of the oldest ethical portfolios. As a CPPI fund, optimiser's cash/ equity blend will be adjusted daily through an automatic process to provide upside exposure while offering protection against falling markets.
The fund will be the second CPPI product for Friends in the last six months, after the UK safeguard optimiser fund last December. Unlike that fund, the new portfolio will not only invest ethically but also actively, which Friends hopes will appeal to socially responsible investors looking for low-risk exposure to equities.
The launch of the fund, which has a £5,000 minimum investment , has been timed to coincide with the 20th anniversary of the Stewardship portfolio. The portfolio, which is benchmarked against the FTSE All-Share index, is up by 27.5 per cent over 12 months and has grown by more than 500 per cent since launch.
Head of investment marketing Ian Jeffries says: “The investment bond market is dominated by with-profits but this is a low-risk, ethical vehicle which offers much greater transparency through CPPI.”
Alan Steel Asset Management consultant David Scott says: “The Stewardship fund has previously done not too badly but I would sell this fund only with plenty of caveats attached.”