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.