Aktie-Ansvar's Swedish structure

In a first for Sweden, fund management company Aktie-Ansvar is set to launch a fund that invests in a wide range of protected structured products. The open-ended fund, Peritus, will also offer monthly liquidity. Amanda Lee reports

Aktie-Ansvar, a fund management company that is part of Stockholm-based finance group Invik, has received approval from Sweden's financial supervisory authority Sw. Finansinspektionen to introduce its open-ended Peritus fund, which will be first in Sweden to invest solely in structured products. Peritus, which has a launch date of March 1, will be listed on the Stockholm Stock Exchange Mid Cap.

"It feels good to be the first in Sweden to introduce a fund that actively invests in capital-protected structured products," says Stefan Carlenius, managing director of Aktie-Ansvar in Stockholm. "The market's interest in direct investments in capital-protected products is quite extensive and we believe this fund will be attractive to retail investors."

Expensive protection

Mattias Bjork, chief financial officer at Invik Group in Stockholm, says guaranteed funds and protected funds have been popular among Swedish retail investors. "After reviewing the types of fund that are available, we found that they are too costly for retail investors because they pay too much for the protection," Bjork says. "We want to do something different, so we have decided that a capital-guaranteed fund is not an option."

Peritus will be managed by Aktie-Ansvar and Garantum Fondkomission, a Sweden-based structured products provider which specialises in designing retail structured products. The investment strategy of the fund is continuous investment and disinvestment in capital-protected or guaranteed structured products. But the fund itself does not offer capital protection.

"The fund management team will select the products that the fund will invest in," Bjork says. "The products can be linked to commodities or equities such as large banking groups, large corporations or telecom companies. And there is no limitation on the investment terms of the products either. The idea is that the underlyings are traded on a secondary market."

The fund administration fee is fixed at 1% and there is a 20% performance fee on the additional returns when compared with the Swedish bond index. "By pooling the assets together you are able negotiate the terms and the fees of the products in which you invest, as well as drawing on the expertise provided by the fund management team," Bjork says, adding that Aktie-Ansvar aims to launch around two funds every year.

In addition, Peritus will offer monthly liquidity and monthly net asset value. "We are going to sell as it an unit-linked insurance product and it will be distributed by insurance brokers," he says. "We are going to sell it to institutions as well."

On the Offensiv

Aktie-Ansvar's combined fund assets amounted to slightly more than SEK14 billion ($2 billion) at the end of 2006. And its foray into the world of structured funds comes after a successful launch of its hedge fund business. The idea is to offer retail investors as wide a variety of investment choices as possible, Carlenius says.

In October last year, Akkite-Ansvar followed its first hedge fund, Hedge Fund Graal, with a second, Hedge Fund Graal Offensiv, which now has in the region of SEK970 million ($139 million) of assets under management. "Hedge Fund Graal is a hedge fund with a low risk profile," Bjork says, adding that the hedge fund, targeted at both individual and institutional investors, is the second largest in Sweden and it has SEK6 billion ($870 million) assets under management.

Since its launch in 2002, Hedge Fund Graal has produced an accumulated return of 45%, largely thanks to a low risk level, according to Carlenius. Hedge Fund Graal Offensiv also allows leverage of up to 200% of the initial investment.

"Our customers have asked for a hedge fund with a higher return potential than Graal. The introduction of Graal Offensiv means that we can offer potential double-digit returns for investors who are willing to take on higher risk compared to Graal," Carlenius says.