The fund invests in a strategy managed by BlackRock’s Multi-Asset Client Solutions group (BMACS), and offers an additional profit lock-in feature.
BMACS, which is responsible for some $577bn in active and passive mandates, will target an asset allocation of 80% global equities and 20% global bonds. The portfolio can be comprised of BlackRock actively-managed funds, exchange traded funds and derivatives.
Citi’s dynamic allocation strategy aims to increase investors’ exposure to the BlackRock portfolio in rising markets, while reducing their exposure in falling markets.
Any decrease in exposure will result in an increased exposure to a reserve portfolio, which Citi describes as a “collateralised cash-like instrument” providing a return of overnight interest rates minus 12.5 basis points.
In a “worst case scenario” the BlackRock portfolio allocation could fall to zero, causing the fund to behave as a cash-like instrument. New share classes with varying allocations to the portfolio may be launched over time, Citi adds, allowing investors to control their personal exposure.
The profit lock-in feature, meanwhile, is designed to ensure that the value of the fund is at least 80% of its highest net asset value (NAV).
“It should appeal to investors who want to have an addition to their portfolio that provides high growth potential with lower risk of draw-downs,” said Al Plattner, the head of EMEA adviser and direct distribution at Citi. “Investors will also have the ability to control their level of market exposure by being able to switch between share-classes with different levels of protection over time.”
The Ucits III fund is Dublin-domiciled and has dollar, euro and sterling share classes. Annual management and administration fees can be up to 1.75%. The cost of protection is 0.85%, and applies only to the allocation to the advised portfolio.