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Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

Investment News

RBS axes much-hyped funds despite ‘volatility protection’

Monday, 22 October, 2012

Investors face losses after returns failed to match claims

By Jeff Salway

The Scotsman
Saturday 20 October 2012

Private investors have been left nursing losses after Royal Bank of Scotland closed two funds that it claimed would provide protection against stock market volatility.

The funds have been shut down in the wake of poor returns less than two years after they were launched in a blaze of publicity.

The decision means many investors in the funds are getting back less than they had invested, with the closure extinguishing hopes of their losses being recovered by the funds.

Not all investors will have emerged with less than they put in, as returns will vary according to the point at which they invested.

The £50 million Volatility Controlled Balanced Managed and the £49m Volatility Controlled Cautious Managed funds were unveiled in January 2011, with the aim of protecting investors from market turbulence. ......

...... The funds were promoted heavily at their launch, with financial advisers being bombarded with glossy sales packs, according to Alan Steel, chairman of Alan Steel Asset Management in Linlithgow.

"I've been around a long time and when something bad happens in the markets and investors are nervous, fund providers always bring out products that they claim are a panacea," he said.

"They're always based on theory and they nearly always backfire."

But Steel was still surprised that the funds were closed down so quickly. "I didn't think RBS would dump them because it must have cost a fortune to put it all together," he said.

"Perhaps people were deterred by the RBS brand, coming so soon after the banking crisis."

Steel urged investors who find they are anxious about equities to do their homework before deciding to pile into new types of funds.

Quote courtesy of The Scotsman
Saturday 20 October 2012

©2023 Alan Steel Asset Management Limited is authorised & regulated by The Financial Conduct Authority. Please note that the Financial Conduct Authority does not regulate some forms of tax advice. Company Registration: SC58014

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The investment services and/or investments referred to in this website may not be suitable for you. If you are unsure we suggest you contact us to discuss matters further. If we believe our services are not right for you we will tell you.

When investing money, whether for income or growth, you are placing your capital at risk as the value of investments may vary, so you could get back less than you started with.

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FOS details can be found at www.financial-ombudsman.org.uk

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