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Julian Gibbs

Friends Provident recently conducted research among IFAs to assess their views on lowerrisk ethical investment. Fifty-nine per cent of IFAs surveyed said their clients would be more likely to invest in ethical funds if a lower-risk investment were available.

Friends has therefore introduced the Stewardship Safeguard Optimiser, which is an ethical fund with a safeguard mechanism offering strong protection against a fall in the stockmarket.

The investment combines a portfolio of equities selected on ethical grounds via the S&P AA-rated Stewardship growth fund and cash deposits.

The Stewardship growth fund is up by 24.6 per cent over the past year and is top of its sector. It has grown by more than 664 per cent since launch in 1984.

Both the equity portfolio and cash component will be actively managed to deliver smooth growth when the stockmarket rises. Unless the stockmarket falls dramatically over a short period, the fund aims to have a safeguard level of 80 per cent of the highest ever unit price previously achieved.

This product is a much more transparent alternative to a with-profits bond, especially as most of the time it will invest a near maximum of 70 per cent of the fund in the Stewardship growth fund and around 30 per cent in cash. This is a much higher exposure to equities than most with-profits funds. It also avoids any market value reduction penalty.

Unlike most other protected products, the Stewardship Safeguard Optimiser is open-ended and the price is quoted daily. An ability to move in or out of the fund is also available on a daily basis.

It is the ideal flexible investment for conservative investors wanting to invest a proportion of their funds in equities but wishing to minimise the downside.


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