What is PIP?
The Protected Investment Portfolio (PIP) is an investment strategy available within your account that aims to provide a balance between capital protection and growth potential. It is not a standalone product, but an optional investment feature within your savings or investment plan.
Key Features
80% Capital Protection Lock-In: From day one, your investment is protected at 80% of its highest ever value (Protected Value).
Daily Rebalancing: Your portfolio is rebalanced daily between a growth asset (Opportunities Plus Fund) and a secure asset (Cash Fund) based on market conditions. The rebalancing is managed by FNZ, a leading hedge-tech provider.
Automatic Adjustments: If the market performs well, more of your portfolio is allocated to growth; if markets fall, more is moved to the safe asset.
Gap Coverage: If rapid market drops prevent rebalancing in time, an investment-grade counterparty will cover the shortfall.
The protected value is always 80% of the highest fund units value your account has ever reached.
How It Works
Your investment is split between two funds: a growth asset (i.e. S&P Tracker) and the Cash Fund (security).
The Protected Value increases every time your portfolio hits a new high.
If the portfolio ever falls below your Protected Value, a gap payment is triggered to restore it.
The capital protection feature costs 1% per annum, deducted quarterly.
Examples of Protected Value in Action
If you invest $50,000, your initial Protected Value is $40,000. If your account grows to $75,000, your Protected Value becomes $60,000 (80% of $75,000). Even if the market falls, the protected value of your investment will not drop below $60,000.
Contributions and Protection
Each contribution receives its own Protected Value based on unit price at the time of purchase.
Over time, different contributions may have different protection levels, but the overall portfolio will always be protected at 80% of its highest total valuation.
Flexibility and Options
If your exposure to the Cash Fund becomes too high (e.g., after a market downturn):
You may reset your protection level to reallocate more to growth assets.
You can switch to another investment fund.
You can redeem your account.
What If the Counterparty Fails?
The company works only with investment-grade counterparties (rated A or better). However, in the unlikely event of counterparty failure or contract breach, your Protected Value could be affected. You would be contacted with alternative options if this occurred.
Account Lockdown
If a gap payment is triggered, your PIP may be temporarily locked (up to 5 business days) while the shortfall is being covered. During this time, you can’t make changes, but your money remains invested in the Cash Fund.
Redemption and Liquidity
You can redeem your funds at any time under the standard Terms & Conditions.
PIP trades daily, so you maintain access to your funds.
Fees
1% per annum protection fee
Charged quarterly via automatic sale of fund units
For new clients, this fee is included in the illustration
How to Monitor Your PIP
You can track your investment 24/7 through the client portal. Fund prices and valuations are updated daily.
Summary
The PIP gives you the ability to invest for growth while benefiting from downside protection. It’s ideal for clients who want long-term exposure to market opportunities with added peace of mind.
For more details, contact your financial adviser or refer to the full Terms & Conditions