The Royal Bank of Scotland is launching its first two UK retail funds to help provide less volatile products for investors.
The volatility controlled cautious managed fund and the volatility controlled balanced managed fund will aim to deliver the levels of volatility that the cautious and balanced labels might ordinarily imply to investors.
RBS research shows IFAs refuse to recommend 33 per cent of balanced managed and 28 per cent of cautious managed funds as they consider them “too risky”.
The research says IFAs placed 44 per cent of clients’ money into balanced and cautious funds in the second half of 2010 while 29 per cent say they fear many investors do not fully understand the risk profile of such funds.
During 2008, several balanced managed funds suffered losses in excess of 25 per cent.
Hargreaves Lansdown investment manager Ben Yearsley says: “You would expect balanced funds to fall but a lot of cautious managed funds fell markedly a couple of years back. Maybe the name of the sector is wrong.”