ING Investment Management has launched two guaranteed funds following a similar product launch earlier this year which raised US$195 million.
The Global Sector Funds, each with a 100 per cent capital guarantee over six years, are designed as low-risk investments while giving investors a choice between two investment return options. Fund one is targeted at more-risk-averse investors, providing the potential for additional gains via a 33 per cent exposure to an equity basket. The second fund will have a equity participation rate of 66 per cent.
The trade-off in equity exposure appears in the guaranteed annual coupons paid out at the end of years one and two. The risk-averse fund will pay between 8 and 10 per cent, while the other will pay between 1.5 and 3.5 per cent.
Starting in year three, investors will receive repayments of their initial investments and any potential investment returns from the equity basket in four annual payments. Each payment is at least 25 per cent of the original principal.
'Investors who are used to buying mutual funds can consider the funds as an alternative to other cash funds,' says bank spokesman Chris Ryan.
The equity basket is made up of 10 international companies, including shares of General Electric, IBM, WalMart, Microsoft and Vodafone.
