Royal Bank of Scotland has closed its much-hyped balanced and cautious volatility funds less than two years after launching the offerings.
The £50m Balanced Controlled Volatility fund and the £49m Cautious Controlled Volatility fund were both launched in January 2011. At the time, RBS claimed the funds would offer levels of volatility that the cautious and balanced labels might ordinarily imply to investors.
The Cautious Controlled Volatility fund is currently the third worst performing fund in the Investment Management Association Mixed Investment 40-85% shares sector in the past 12 months, having fallen 1.4 per cent in value compared to an average return of 11.1 per cent for the sector. Since launch, the fund has fallen over 10 per cent, while the sector has returned an average of 5.05 per cent.
The Balanced Controlled Volatility fund sits in the Specialist sector and has returned 6.1 per cent in the past 12 months, compared to a sector average of 11.1 per cent. Since launch, the fund has fallen 8 per cent compared to an average return of 0.26 per cent in the Specialist sector.
An RBS spokesman says: “Following a review undertaken by Royal Bank of Scotland M&IB, it was decided to close the Volatility Controlled Cautious Fund and the Volatility Controlled Balanced Fund.The FSA approved the application to formally terminate the funds on 9 October and investors’ units were redeemed at NAV on 11 October.”
Chelsea Financial Services managing director Darius McDermott says: “We never recommended these funds and its no surprise they have been closed.”