Following last week’s announcement that First Abu Dhabi Bank (FAB) received approval from the Ministry of Human Resources and Emiratisation (MoHRE) as a provider of the End-of-Service Benefits (EOSB) Savings scheme, the bank has now published a document on Frequently Asked Questions (FAQ).
The FAQ document (available for download below) discloses Deutsche Securities and Services, Dubai Branch as the custodian for FAB’s EOSB Savings plan and Apex Fund Services Limited, Abu Dhabi as fund administrator and transfer agent. FAB has not yet disclosed whose infrastructure (IT platform and administration center) will be deployed to manage the scheme.
The FAQ document also divulges interesting details regarding the capital protection mechanism. Potential investors should take note that the two FAB Capital Protection Funds (see our previous article) are not fully guaranteed and that the capital protection offered by FAB is limited as such: Each year, 1% of the net asset value (NAV) of the fund will be put aside into a reserve account to cover potential losses. The document further cautions that investors may experience limited losses from their initial subscription if market conditions remain challenging for an extended period.
We discussed in a previous article, that there are several ways of providing “guarantees”, and in many of those options, investors are still exposed to some residual risk. The FAB EOSB Capital Protection Funds are a good example of this, and it is interesting to note that the regulators of the EOSB Savings scheme have approved this mechanism for the “Guaranteed Fund” option even though they are, strictly speaking, not guaranteed.
Pensions Monitor will be analysing the capital protection mechanisms of the other fund managers in our forthcoming articles. Subscribe to our newsletter for valuable insights!
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