Vitality launches new funds for cautious investors amid market uncertainty

By Daniela Esnerova

Jan 29, 2019

VitalityInvest has launched two new funds for risk-averse investors in the midst of market uncertainty.

VitalityInvest Protector Growth Fund and VitalityInvest Protector 3-4-5-6 Defensive Fund will be managed by Investec Bank.

Vitality first introduced its in-house funds last June, when it partnered up with Investec Asset Management to offer range of active risk-managed funds. At the same time, Vitality launched passive offering with Vanguard as an underlying manager.

The new funds are aimed at investors with medium-low and low risk appetite. Both funds have a rating 3 on a Priip scale risk scale. Ongoing charges are 0.5 per cent a year on the Performer Growth Fund and 0.65 per cent on the Defensive Fund.

Vitality chief executive Herschel Mayers says: “The funds are suitable for the times that we are in. Markets are volatile at the moment.

“With Brexit getting closer and closer, and the US/China trade wards, there’s a degree of uncertainty globally.

“So people are staring to ask. What is going to happen? How is it going to impact the markets and how is it going to influence my investment or saving strategy?

“Interest rates are obviously unbelievable low. Inflation is starting to pick up, so people are looking for higher yielding investments. We think these are the two challenges facing investors and advisers advising on investments. So we asked ourselves, how can we launch funds that meets that particular needs?”

Mayers says that the new offering is not solely about protecting against downside risk though.

He says: “If you want to be totally defensive, put your money under mattress. That’s the safest – but you will lose out at the end of the day.

“You don’t want a product that is totally defensive and gives you no upside, because you don’t want to be tied up, and markets and economy are hopefully going to go better.

“How do we ensure that we got a right balance between downward protection and, if things go well? If things go well, your capital is protected  – with boosts more than capital protected. If the market and economy grows, you are going to get your money protected, plus growth plus additional fifty per cent of that growth.

“The boosts” – or an additional top up on savings for every five years of being invested in Vitality funds, which  may increase the return on investments by up to 15 per cent over 25 years – aims to motivate people to start saving sooner.

Mayers says that it is too soon to measure the effects in the UK, since they launched the funds just a few months ago. He adds, however, the similar product South Africa, which has been live for a longer time, achieved its goal.

“People are invested for longer duration. While we don’t have enough data for the UK yet, it has to work. It makes sense that it works.”

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