Citibank releases capital guarantee fund

Citibankwill be launching a capital guaranteed product in response to what it perceives as the caution many investors have adopted in response to the downturn in global equity markets.

The fund, the Market Linked Investment (MLI), will invest in companies in both the Australian S&P/ASX 200 and the US S&P 500 index.

Citibank wealth division head of product Denis Gambi says the MLI product will give investors the best of both worlds by offering them access to both the local and American market, while also guaranteeing the capital of their investments.

“The Market Linked Investment is the only capital guaranteed product in the market that combines access to both the Aussie and the US markets in one product, guaranteeing a minimum return of 3 per cent on the original amount invested if held for the full two year term,” he says.

While the fund aims for a minimum return of 3 per cent, it has a maximum target of 20 to 25 per cent in its sights, according to Gambi.

Gambi says he has seen a large number of capital guaranteed funds getting increased inflows throughout Asia in the last six months due to investor uncertainty over this period.

He says the company will also be offering other products similar to the MLI fund in the next few months, such as products linked to the gold price, foreign currencies, or combinations of stock indexes.

The current offer will close on June 27.