The Market Stability Fund invests in a well-diversified portfolio consisting of structured investment products with a conditional principal guarantee. These products offer a relatively high return compared to the risk. By spreading over multiple products with different characteristics (such as maturities and start and end dates), the risk is reduced. Through active management and risk management, risks are further reduced and returns are optimized. The MSF is part of Morningstar under the “Protected Capital” category.
The structured investment products are tailored to the fund's objectives and current market conditions. These are customized by Investment Banks. The manager has extensive knowledge and experience in selecting products that provide an attractive risk-return profile. In addition, there are good and long-term relationships with the issuers. This leads to good conditions combined with low costs.
The structured investment products take advantage of the fact that investors do not act rationally (“behavioral finance”). Many investors are trying to maximize upside while trying to limit downside risk. As a result, people are willing to pay an insurance premium in order to avoid losses. Since the demand for protection is high, especially in stock indices, the insurance premium is high for the risk that is hedged.
The fund was established on January 1, 2018 and is a common account fund. The Market Stability Fund Foundation is the legal owner of the fund's assets. Management is carried out by MSF Asset Management B.V.
