A smarter way to invest
In today’s volatile and uncertain market, risk is often a key component of investment decisions. Mitigating risk could mean investing in traditional “low-risk” asset classes like cash or fixed interest; however, with current low interest rates and sluggish economic growth, investing in these asset classes may severely limit capital growth. Worse, it may actually expose you to the unintended risk that a lack of diversification can bring.
So what can you do?
If you are seeking a smoother journey, the Smartfund range can help. Each fund offers you the potential returns of actively managed global multi-asset risk-graded strategies. Smartfund 80% Protected provides the additional benefit of 80% protection of the highest fund value achieved, with the protection delivered by Morgan Stanley
At the centre of each Smartfund is a risk-graded strategy managed by Smartim. Each strategy has a specific risk profile and invests in a carefully constructed blend of asset classes. Smartfund is available in three different currencies, GBP, EUR and USD.
A choice of investment strategies
Historically one of the best ways to achieve higher investment returns over the long term has been to invest in equities; however, though equities can provide higher returns they are also higher risk. Including other asset classes in your strategy can provide the best risk-adjusted returns.
At the centre of each Smartfund is a risk-graded strategy managed by experts at Smart Investment Management (Smartim). Each strategy has a specific risk profile and invests in a carefully constructed blend of asset classes. Smartfund is available in three different currencies (GBP, EUR and USD).
The three Smartfund risk-graded strategies will be exposed to everyday stock market movements - they are not protected from losses due to volatile market movements but retain all the gains in a rising market. The Smartfund 80% Protected funds are protected to 80% of the highest value they have achieved, a “high-watermark” strategy.
Smartfund uses an active risk on/risk off strategy based on prevailing market volatility vs a target or expected level to:
• Exploit the long-term trends between volatility and return
• Maintain the fund's volatility close to the specified target level
• Minimise the cost of protection (for 80% Protected only)
As a result the Smartfunds exposure to its investment strategy can change daily based on market conditions.
About Smartfund 80% Protected
Smartfund 80% Protected provides an extra layer of comfort for clients who prefer more security for their investments. These capital-protected funds are made up of two parts: the protection component provided by Morgan Stanley, and the risk-graded strategy managed by Smartim. The protection component ensures that at all times the fund price is 80% or more of the highest fund value ever achieved. Gains made above the previous highest fund value are locked in, thereby continually increasing the protected level.
Who is involved in the funds
The world’s leading financial advisers, investment managers, institutions, accountants and product providers use Praemium to manage or administer over $100bn (£59bn) worth of investment globally across more than 475,000 accounts. Established in Australia in 2001, Praemium has grown to be a market-leading provider of managed account platforms, investment management, portfolio administration and CRM solutions with offices in Australia, the UK, Jersey, Dubai, Armenia, Shenzhen and Hong Kong. For more information visit www.praemium.com.
Smart Investment Management Ltd (Smartim) are the sub-investment managers for the risk-graded strategies at the heart of the Smartfund range. Smart is directly regulated by the FCA and is an authorised investment management company based in London. Smartim is a wholly owned subsidiary of Praemium, a global company with offices in Australia, the UK, Jersey, Dubai, Armenia, Shenzhen and Hong Kong.
How the funds may perform in different market conditions
Both funds are designed to allow you to grow your capital, but the investment journey will be different for each fund as markets rise and fall. Investing in Smartfund may afford you a slightly better return in the long term, whilst an investment in Smartfund 80% Protected will protect you from the worst of the stock market waves along the way. You choose which is the right route for you.
This chart illustrates how Smartfund and Smartfund 80% Protected might perform in different market conditions. In this example, at launch one client invests £100 into Smartfund (the purple line) and £100 into Smartfund 80% Protected (the blue line). The protection level of the 80% Protected fund is illustrated by the lilac line.
Please note that the value of investments and the income from them may go down as well as up and you may not receive back the amount originally invested. Past performance is no guarantee of future performance. The investments and investment services referred to on this website are only available through regulated financial advisers and may not be suitable for all investors. If you are unsure as to whether the investments described in this site are suitable for you we recommend you seek professional advice from a financial adviser.
Risk warnings - Smartfunds
An investment in any of the funds in the Smartfund range, and specifically the Smartfund 80% Protected funds, carries a number of considerations and risks. The information outlined on this page is intended to summarise the key risks. There are other general risks which include risk of partial loss of capital, market risk, currency risk and counterparty risk.
The risks of investing are outlined in detail in the Prospectus, the Supplement to the fund and the Key Investor Information Document (KIID). We urge you to read these documents prior to recommending an investment in the Smartfund Range. You should also provide copies to your client so they can make an informed investment decision. All clients must take advice from a financial adviser prior to making an investment in the Smartfund Range.
Risk warnings – Smartfund 80% Protected
- The Smartfund 80% Protected fund offers 80% protection of the highest fund value achieved, which means that in adverse market conditions the value of your investment can go down by 20%.
- Where we refer to “locked-in profits” this relates to the protection level of 80% of the highest fund value achieved. If the fund-value increases above the previous fund-value high, then 80% of any such upside is protected, or “locked in”, thereby increasing the protected level.
- Morgan Stanley provides the protection component of the Smartfund 80% Protected fund and acts as counterparty to the fund, so if Morgan Stanley becomes insolvent the protection component may fail.
- In their role as Investment Manager, Fundlogic Alternatives SAS will seek to hedge the share classes of the funds to counteract the impact of currency fluctuations. In adverse situations they may not be successful in protecting against all exchange-rate risk, which may result in the capital protection of Smartfund 80% Protected being less than 80% of NAV for the USD and EUR share classes.
Smartfund 80% Protected – returns and capping
The Smartfund 80% Protected fund aims to deliver the maximum protection with the minimum negative impact on your investment returns. To achieve this, a monthly performance cap is set for each strategy.
- Smartfund 80% Protected Growth: monthly cap of between 5% and 6%
- Smartfund 80% Protected Balanced: monthly cap of between 3% and 4%
These caps vary depending on the fund’s risk profile. The more significant the equity exposure, the greater the potential investment returns, so the Smartfund 80% Protected Growth will have a higher cap than the Smartfund 80% Protected Balanced to ensure you get as much of the upside as possible. Though it would be rare for the funds to breach these caps, extreme market conditions do occur, and if the performance of the fund does exceed the level of the cap in any calendar month then you will achieve returns up to but not above it.
The Fund uses a number of mechanisms to keep the cost of protection to a minimum; however, the cost of protection will likely result in the Smartfund 80% Protected funds underperforming the Smartfunds over the longer term and in rising or flat market conditions.
Investing in the Smartfund range – Important information
The Smartfund 80% Protected funds and the Smartfund funds are all sub-funds of FundLogic Alternatives SAS which is a UCITS fund incorporated in Dublin and regulated by the Central Bank of Ireland. Decisions and advice in relation to any of the Smartfunds should not be made without reading the latest applicable Key Investor Information Document and Supplementary Prospectus, available on this website or on request.
The Smartfunds are not offered for sale in the USA, or any state, territory or possession thereof, nor to any US persons including citizens of the United States, nor in any jurisdiction in which the funds are not authorised to be publicly sold. The funds are available only in jurisdictions where their promotion and sale are permitted by applicable local law.