NU Online News Service, April 18, 3:26 p.m. – IDEX Mutual Funds, Denver, a unit of AEGON N.V., The Hague, Netherlands, is starting a “principal-protected” mutual fund, the IDEX Protected Principal Stock Fund.
The new IDEX fund will guarantee the investor’s principal, after loads and expenses are deducted, if the investor holds assets and dividends in the fund for at least five years.
Each year, the investor can lock in any gains by agreeing to a new five-year holding period.
Although AEGON/Transamerica Fund Advisers Inc. will back the principal guarantees for investors who keep their funds for the minimum required holding period, investors who cash in early could lose money if the mutual fund’s performance is poor, IDEX says.
J. Patrick Rogers of Gateway Investment Advisers L.P., Cincinnati, will manage the fund’s investments. He intends to invest mainly in S&P 500 stocks.
Transamerica Capital Inc., Denver, will take charge of distribution.
The fund will be open to new investments until June 27. Investors must make their first investments by July 1.
IDEX says it believes recent U.S. stock market volatility has increased interest in principal-protection features.
Principal guarantees have been popular with mutual fund investors in Europe and Asia, and with variable annuity purchasers in the United States.
Until recently, however, strong stock market returns have kept the concept from attracting much attention in the United States.
Aside from AEGON, one of the few other companies trying to sell principal-protected funds in the United States is another Dutch financial services company, ING Groep N.V., Amsterdam.