Skandia's protected portfolio investment range provides capital growth linked to a portfolio of five externally managed funds, with varying degrees of capital protection and return.
The underlying portfolio of the protected portfolio investment contains the Framlington equity income, Schroder UK mid-250, New Star alpha, Norwich property trust and Invesco Perpetual corporate bond funds, which are given equal weighting in the portfolio.
Investors have three main options to choose from. Averaged return has a five-year term and offers a choice of 80 per cent capital protection plus 200% growth in the portfolio or 100 per cent capital protection plus 100 per cent growth in the portfolio.
Assured return has a six-year term and offers a minimum return of the original capital plus 20 per cent growth, with maximum growth potential of 50 per cent plus the original capital. Finally, accelerated return has a six-year term and offers a full capital return plus 65.5 per cent growth at the end of the term. However, an early maturity feature means that investors will get their original capital plus 20 per cent growth after three years if the portfolio has grown by at least 33.6 per cent at that point.
Unlike most structured products which are liked to one or more indices, Skandia protected portfolio investment range provides access to diverse portfolio of actively managed funds. Theses are spread across a mix of asset classes and investors are protected from the risk of capital loss that comes with direct investment in the funds.
However, one potential drawback is that the portfolio is fixed at the outset, both in terms of weighting and the selection of funds. This means that investors could be locked into the portfolio when some of the funds are not doing as well as expected with no opportunity to shift the weighting towards the better performers or replace funds if necessary.