AXA Investment Managers (AXA IM) has launched two UK-domiciled equity funds offering downside protection for institutional investors, including defined contribution (DC) pension schemes.

The products – Equity Shield 75 and Equity Shield 80 – form part of a new Equity Shield strategy and have been seeded with more than £200m (€234m) by a large UK DC pension fund.

The funds provide exposure to the MSCI World Climate Change Index in GBP while incorporating structured protection against equity market declines.

Over a 12-month period, the Equity Shield 75 fund aims to limit losses by preventing the net asset value (NAV) per share from falling below 75% of its highest NAV during that time. The Equity Shield 80 fund offers a similar buffer at the 80% level.

The launch is intended to meet demand from UK pension funds seeking to maintain equity exposure for members nearing retirement, while mitigating the risk of large drawdowns, the firm noted in a statement.

AXA IM said the strategy offers a more stable alternative to traditional equity investing, with two levels of downside protection designed to suit different member risk profiles.

The funds are managed by AXA IM’s structured asset management team, which includes 12 portfolio managers and oversees approximately £21bn in assets. Seven of these professionals focus on developing bespoke hedging strategies for institutional clients, it added.

Herschel Pant, head of global consultant relations and UK institutional at AXA IM, said: “Investors inform us that pension scheme members want to remain invested in equities amid market volatility but without risking their retirement outcomes. Our equity shield strategy addresses this problem by aiming to shield members in all market conditions.”

He said AXA IM was launching the product “with a strong partnership in design and implementation with a prestigious DC scheme and their advisors”. The name of the pension fund was not disclosed.

Rene Poisson, managing director at Poisson Management and an independent trustee, added: “By providing members with some protected equity exposure to and through retirement, I believe the strategy will help members access the growth they need to achieve a better long-term outcome in retirement.”

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