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The objective of this fund is to provide long term capital growth by investing in a portfolio of shares primarily in the FTSE 100 index with an option overlay to provide continuous downside protection. The aim being to produce a 'halfway house' between the UK equity market and cash.
The FTSE 100 index is fully covered by purchasing equities with a FTSE 100 put option to limit the downside. Additionally call options are written to reduce the cost of the puts and are sold at a level decided by the investment committee.
The derivative strategy is to provide downside protection of 95% of the bid price at the start of the safety period. This safety price will remain in force for at least a year or until reset upwards if the underlying bid price has increased by around 10%. A reset downwards can only occur after the one year safety period ends.