BetaShares fund promises ‘reduced downside’ in declining markets
Investors will be able to gain access to a "diversified basket of Australian shares" while enjoying "reduced downside in declining markets" with a new BetaShares fund, the company believes.
BetaShares managing director, Alex Vynokur, said the BetaShares Managed Risk Australian Shares Fund, launched on the Australian Securities Exchange (ASX) today, would provide investors with a "smoother investment ride".
The fund's investment strategy is to invest in a passively managed basket of Australian shares (generally consisting of approximately 200 of the largest shares on the ASX by market capitalisation), providing investors with the opportunity for capital growth and income.
In addition, it will employ an active risk management strategy, which seeks to reduce volatility and defend against losses in declining markets.
"Investors and their advisers are increasingly being made aware of a major investment challenge - invest too cautiously and risk insufficient investment performance required to fund lifestyle purposes; invest too aggressively and risk exposure to significant losses in a market decline," Vynokur said.
"Particularly in a low interest rate environment, the potential performance and income benefits of investing in shares are attractive to investors. However, investors may be concerned about the effects of volatility and potential losses when markets fall, particularly in the current environment, where the volatility of the S&P/ASX 200 has risen to its highest level since 2011.
"To address this, the Fund's risk management strategy actively monitors sharemarket volatility and, when volatility rises, applies a handbrake to reduce the impact of major market declines. It does this by reducing investors' exposure to equities in falling markets, while still allowing participation in rising markets. The risk management strategy utilised by the Fund aims to provide investors with a smoother investment ride."
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