Gilliat Financial Solutions launches UK Sector Leaders Kick Out

Gilliat Financial Solutions has launched a UK Kick Out product based on the nine main sectors of the UK market.

The UK Sector Leaders Kick Out – February 2011 aims to offer investors the opportunity for equal exposure to the nine sectors, as opposed to a capitalisation weighted basket such as the FTSE 100 index.

The product kicks-out with a step up payment of up to 12.5% if any eight out of the nine underlying stocks are equal to or higher than its reference levels.

It seeks to protect the investment capital to a high degree by grouping the nine underlying stocks to create an equally weighted ‘basket’ (taking the sum of the individual performance of each of the nine underlying stocks and dividing by nine to give an average performance).

The movement of this basket will be used to calculate the return of investment capital. The result is that compared to the FTSE 100 index, the ‘basket’ has a lower volatility level while maintaining a high correlation with the index.

Adrian Neave, managing director of Gilliat Financial Solutions, said: “Kick-outs will continue to be popular with IFAs and clients who are mildly bullish about equity markets.

“Having an equal weighting in each of the nine sectors means that exposure is spread across different market sectors of the economy without the sector bias associated with market capitalization weighted indices such as the FTSE 100 and this principle reduces the risk associated with individual sectors.

“Back testing has shown that this strategy presents a kick out event 98.60% of the time during all six year cycles tested from 19/03/2002 to 18/01/2011, showcasing the strength of this product.”