Finance News: UBS launches 'more stable' investment fund

Mathew Little

UBS Global Asset Management has launched an investment fund aimed at helping charities escape the 'rollercoaster ride' of the stock market.

The Targeted Return Fund is designed to meet charities' pre-defined income needs, rather than leaving them at the mercy of the fluctuations of the equity market.

"Institutional investors have been facing a difficult choice between the volatile but potentially high real returns of equities, or the relatively safe haven of bonds, with more predictable but lower returns," said the firm's head of UK institutional business, Nigel Taylor. "We offer another option - a pooled fund that gives easy access to the benefits of both."

The fund will be based on an average 65 per cent equity holding, but a third will be held in derivatives, which set the price at which stock will be sold at a future date. "On average, we would expect to take away 30 per cent of the equity market exposure, although this is flexible depending on the attractiveness of the market," said John Harrison, UBS Global Asset Management's client portfolio manager.

Harrison said that the fund would be attractive to charities keen to avoid the unpredictability of equities, but admitted that it would not be obviously attractive to grant-making trusts seeking investment returns over a 30 or 50-year period.

The fund will not seek to beat a benchmark of other funds, but to produce a consistent, long-term return of 6 per cent per year.

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