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RBS unveils funds that aim to beat volatility

The Royal Bank of Scotland is launching its first two British 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.

Research by the bank revealed IFAs refuse to recommend 33 per cent of balanced managed and 28 per cent of cautious managed funds as they consider them “too risky”.

Despite this, IFAs placed 44 per cent of clients’ money into balanced and cautious funds in the second half of 2010. Only 8 per cent expect this figure to decrease in the first part of this year.

Still, 29 per cent of IFAs expressed concerns about many investors not fully understanding the risk profile of their balanced or cautious funds.

During 2008, several balanced managed funds suffered losses in excess of 25 per cent. However, 89 per cent of retail investors still describe their risk profile as “medium” or “low”.

RBS promises “greater transparency” where the funds are concerned as a means of attracting investors.

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