New Ireland did well with the launch of the Sentinel Fund in September 2019. The multi-asset fund, managed by parent Bank of Ireland, offered single premium investors 85% protection of the highest fund value before fees and charges. 

The fund, which attracted €150m from investors, saw its Net Asset Value increase from 100 at launch to 106 near the end of February 2020. This increased the effective protection level to 90%, and then stock markets tanked. 

Bank of Ireland Investment Managers limited the NAV downside by offloading the fund’s equities – about 50% of the fund value – and switching into cash. This limited the January to early June decline in the fund value to 2.9%, according to New Ireland, though recovery in NAV in April and May was crimped by the low weighting of equities in the portfolio. 

Head of investment sales Andy Ivory Corr (pictured) explains that Sentinel Fund’s risk management targets a volatility level of 6%: “As the markets calm down and volatility returns to normal, the fund will increase exposure to the more volatile assets such as equities and property.”

The market downturn in March meant the protected level was above 90% of the unit price of the fund. That 90% protection of NAV comes at a higher cost than the 85% protection promised at launch. That’s not an issue when the fund NAV is appreciating, but it is an issue when NAV is underwater from the launch price, as fund investors have to pay a higher cost for capital protection.

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One of the Sentinel selling points is that there is no lock-in period, so investors are free to check out, even if seven years is the recommended investment term. On June 8, New Ireland closed the Sentinel Fund to new investment and opened the Sentinel II Fund the next day. Like the original Sentinel fund, Sentinel II offers 85% protection of the highest fund value.

Meanwhile, over at Zurich Life there seems to have been less panic over equities, judging by the make-up of the company’s Balanced Fund. With €1.8 billion under management, the Balanced Fund is one of Zurich’s largest, and has been on the go since 1989.

Year to date performance at the end of June (pre-charges) was 1.0%, better than the sector average of -6.9%. Ten-year performance has been 8.9% p.a., which will do most savers and is three points better than the average.

Faith in equities underpins the Balanced Fund. The current make-up is 72% equities, 25% bonds and 3% cash. Share investments are allocated across c.400 stocks and Zurich fund managers don’t give much away, beyond noting that the top ten holdings are heavily weighted to US tech giants such as Microsoft, Amazon, Facebook, Apple, Alphabet, Paypal and Salesforce. 

Information technology accounts for one-third of equity holdings, though consumer discretionary, health care and financials make up c.40%.

Head of investment development Richard Temperley says the company has been maintaining equity positions at the upper-end of ranges recently, mainly due to their value relative to sovereign bonds. According to Temperley: “The equity content had been increased in early March following much of the sharp fall. With regards to geographic positions, the main bias is towards Asia, Japan and Europe. 

“North America has been reduced to an underweight position following a particularly strong run in the US. Corporate bonds have been increased at the expense of sovereign bonds over the last few months.”