RBS unveils funds that aim to beat volatility

The Royal Bank of Scotland (RBS) is launching its first two British retail funds to help provide less volatile products for investors.

The Volatility Controlled Cautious Managed fund and the Volatility Controlled Balanced Managed fund will aim to deliver the levels of volatility that the cautious and balanced labels might ordinarily imply to investors.

Research by the bank revealed IFAs refuse to recommend 33% of Balanced Managed and 28% of Cautious Managed funds as they consider them “too risky”. (article continues below)

Despite this, IFAs placed 44% of clients’ money into balanced and cautious funds in the second half of 2010. Only 8% expect this figure to decrease in the first part of this year.

Still, 29% of IFAs expressed concerns about many investors not fully understanding the risk profile of their balanced or cautious funds.

During 2008, several Balanced Managed funds suffered losses in excess of 25%. However, 89% of retail investors still describe their risk profile as “medium” or “low”.

RBS promises “greater transparency” where the funds are concerned as a means of attracting investors.