Unit Linked
This is a special type of unit-linked policy (an investment tied to an insurance fund) which guarantees repayment of capital at maturity and has the advantage of investing in a diversified basked of mutual funds and SICAVs. In order to develop this product, Abaxbank established partnerships with a selection of the leading asset management companies and insurance companies, in terms of both fund management and product distribution.
The dynamic allocation management method used is highly flexible, in that it offers periodic coupons or lock-in structures as an alternative to guaranteed capital at maturity.
Abaxbank’s Unit Linked policies are structured according to fundamental parameters such as the duration of the Units, the interest rate curve, a historical analysis and forecast of the benchmark funds in terms of volatility and the definition of guarantees provided at maturity.
Managed using CPPI methodology, these portfolios are index-linked to a portfolio which invests in two components:
- Risky Assets: this is the benchmark portfolio which are extremely liquid and may be comprised of mutual fund shares as well as futures, hedge fund shares and baskets of individual shares;
- Risk-Free Assets: the Portfolio used for investment only when required by market conditions in order to protect the capital. This Portfolio is comprised of money market/bond funds and discounted bond funds issued specifically for the policy.
The portfolio is managed dynamically:
- if the value of the Benchmark Portfolio increases, the investment in the Risky Asset increases as a result;
- if the value of the Benchmark Portfolio decreases it is decided to also invest in the Risk Free Asset, to rebalance the overall investment.