Saudi Arabia's Al Rajhi Bank is marketing three Capital Protected Funds devised by its investment banking unit Al Rajhi Capital.
The three-year, Shariah-compliant funds offer a choice of exposure to local, GCC (Gulf states) and international shares as well as 90% capital protection (95% for the international option).
"Today more than ever, security is top of mind for investors and we are delighted to introduce a product that considerably eliminates the risk of capital loss. Our Capital Protected Funds are ideal for more cautious investors, allowing them to benefit from the potential upside of more risky asset classes such as equities whilst knowing their capital will be protected all the same," said Al Rajhi Capital CEO Marcus Andrade.
The funds invest in deferred sales of commodities as capital protection and in a deposit (Arbun) with similar features to an option premium, which is effectively a call on a dynamic portfolio.
This portfolio will allocate between the relevant equities and a low risk commodities fund operated by Al Rajhi based on the volatility of the riskier assets.
The funds are open to individuals, corporates and institutions, both local and foreign, for a minimum subscription of SAR10,000 ($2,666) until 23 May 2010.