TheStar
KUALA LUMPUR: ING Funds Bhd expects its latest product, the ING Annual Alpha Access Capital Protected fund, to provide annual returns of 7% to 10%.
Chief executive officer Steve Ong said the three-year close-ended capital-protected fund would provide investors with 100% capital protection while seeking to generate high returns.
“The fund’s capital-protected value is derived from investing in ringgit-denominated financial instruments from local financial institutions that will return 100% of the invested capital to investors at the end of the three-year period,” he told reporters at the launch of the fund yesterday.
To generate potential high returns, the fund will invest up to 10% of its net asset value in the ING Outperformance Alpha Option, a three-year ringgit hedged over-the-counter call option, consisting of global emerging markets ex-Asia and the Asia emerging markets indices versus the US S&P 500 index.
“The two global emerging markets’ basket of indices offers investors diversification as they are not correlated with one another. The composition of global emerging markets ex-Asia includes Russian Depository Index, Central and European Europe Index, iShares MSCI Brazil Index Fund and iShares MSCI Mexico Index Fund.
“The Asia emerging markets consist of Hang Seng China Enterprises Index, Kospi 200 Index, MSCI Taiwan Index and ASX 200 Index,” Ong said.
The interesting feature of the fund was its strategy, which aimed to provide investors with an annual payout regardless of bull or bear market conditions with the potential out performance of the two global emerging markets’ basket of indices versus the US S&P 500, he said.
Based on historical data, these markets have been registering higher returns than the US S&P 500.
According to ING Bank Singapore director for exotic equity derivatives trading Camiel Houwen, the US recession was likely to last up to 18 months, affecting the country’s growth, while the China economy was well geared to weather a global slowdown as it had demonstrated a lower degree of sensitivity to a downshift in the US demand.
The fund has an approved fund size of 500 million units with a minimum initial investment amount of RM5,000.
ING Funds targets to increase the size of its funds under management to RM3bil from about RM2bil as at end-2007 with the launch of three more products this year.
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