Colonial First State (CFS) has teamed up with a South African investment manager to launch three hedged equities products.
The wealth management arm of CBA has joined with South African investment manager Sanlam Group to launch a suite of managed risk funds on the FirstChoice platform that aim to smooth the ride for investors in the hope of keeping them invested during large market downturns.
The new funds – the Sanlam Managed Risk Australian Share Fund, the Sanlam Managed Risk Global Share Fund and the Sanlam Managed Risk Multi-Index High Growth Fund – are effectively three CFS index funds with Sanlam's active risk management strategy overlaid on them.
The Sanlam strategy is managed by global financial services consulting firm Milliman and utilises short futures to hedge out risk.
According to Sanlam head of investments David Itzkovits, the managed risk funds aim to "smooth the journey" for investors by achieving lower returns in bull markets and losing less in bear markets.
CFS general manager for products and investments Peter Chun said a lot of thought had gone into the new Sanlam products.
"We've seen a lot of competitors come out with protected products [that are] expensive and inflexible [which] doesn't fit with how advisers use them," Mr Chun said.
"It's no surprise most of them have not been that successful."
The partnership with Sanlam is a result of a "search around the world" for a solution that is cost-effective, flexible and "complementary to how advisers recommend strategies to their clients", Mr Chun said.
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