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Familie

How they work

How a guarantee fund works is illustrated using the SF (Lux) SICAV 2 – Skandia Maturity Protected Fund as an example.

A large part of the fund's assets are invested in a zero bond. This guarantees the maximum (maximum NAV) at all times. Unlike a classic bond, the interest (coupon) on a zero bond is only paid out at the end, which is why we also talk of a zero coupon bond. The part which is not required for hedging is actively invested, and this part strives for the most attractive returns possible.

The guaranteed maximum is your safeguard

The market value is regularly checked to determine the guaranteed maximum. If it is higher on the monthly reporting date than the previous guaranteed level (maximum), the sum guaranteed on expiry rises to the new value. If the previous guaranteed level was higher, then the higher value is guaranteed (see diagram).