An Alternative to Target Date Funds and VAs

Structured Investment Management (SIM) Inc., has launched a new mutual fund, the S&P 500 Capital Appreciation Fund, that it says overcomes the poor performance of dynamic asset allocation strategies used by target date funds, many variable annuities, and certain principal-protected notes.

Besides offering tax and liquidity advantages as well, the fund provides upside exposure to the S&P 500 index, while providing protection and a positive return on the downside, according to Structured Investment Management, an investment advisory firm headquartered in New York.

According to SIM, the fund is passively managed to track the S&P 500 index on the upside but, on the downside, has derivatives contracts in place to ensure that its Net Asset Value (NAV) in 10 years will be at least 150% of its initial NAV less certain fees, expenses and costs. In the case of the Class A shares, this should result in a minimum NAV that is approximately 119.4% of initial NAV, the company says. SIM says it designed the fund and is its investment advisor, but the fund is administered by U.S. Bancorp Fund Services.