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Investec targets 30 lowest volatility blue chips in new fund

by Dylan Lobo on Apr 23, 2014 at 07:00

Investec targets 30 lowest volatility blue chips in new fund

Investec Structured Products has launched a fund which tracks the 30 least volatile stocks on the FTSE 100.

The UK Controlled Volatility fund is a sub-fund within the firm's Objective Returns umbrella. 

The vehicle is linked to the Even 30™ Index, which tracks the 30 lowest volatility firms with stocks equally weighted and re-selected on a monthly basis.

A key feature of the Even 30™ Index is a volatility control which in highly volatile markets can reduce exposure to the 30 constituent stocks to lower the fund's risk profile.

In addition to providing capital growth, the UK Controlled Volatility fund will distribute any dividends paid by the stocks within the index, which as at 1 April was yielding 3.79%.

Investec has back-tested the fund and, according to the firm, the accumulation share class would have returned 40.6% in the three years to February 2014 after charges. This outstrips the 23.3% rise of the FTSE 100.  

The Controlled Volatility fund is the first of four fund launches lined up by Investec Structured Products in 2014.

It is also the second open-ended fund launch, following the Income Booster fund which launched in October 2013. This fund aims to deliver a 7.5% annual income through a strategy linked to the FTSE 100.  

Investec Structured Products head Gary Dale (pictured) said of the new fund: 'This is a timely launch as the UK Controlled Volatility fund will aim to exploit inefficiencies in the market that have hitherto remained relatively unexploited by investors.'

He added: 'By basing a fund on a lower volatility index, we are enabling investors to reduce their risk profile whilst retaining their equity exposure.'

The fund will sit within the IMA UK Equity sector. Accumulation and income share classes are available. The minimum investment is £3,000.  There are no initial charges and the annual management charge is 0.75%.

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