Allianz Global Investors has announced details of its Dynamic Growth Fund, which offers investors equity-like returns with a lower level of volatility.

The dynamic, ‘second generation’ diversified growth fund also aims to offer positive real returns over a market cycle and a level of downside protection in times of market stress.

The fund will gain exposure to a broad mix of asset classes through investing in ETFs and use proprietary processes to identify and generate strategic, unconstrained allocations across asset classes in an efficient and risk controlled way.

Additionally the team will employ tactical asset allocation, which not only assesses the macro-economic environment, business cycle, and market technicals, but also draws on the research and resources of RCM’s global investment platform.

While diversification, strategic and tactical asset allocation will provide a degree of downside protection, a sophisticated, holistic total return risk management module aims to enhance this protection further by limiting downside risks.

The new fund will be managed by RCM Systematic, a specialist team based in Frankfurt. Herold Rohweder, global chief investment officer for RCM Systematic, believes that the diversified growth strategy is intrinsically different from other ‘balanced’ or ‘absolute return’ approaches.

He said, ‘Firstly, as part of our dynamic and tactical asset allocation process, the fund is not constrained by maximum or minimum exposures or blended asset benchmarks and it can genuinely vary exposure to any asset class from 0 per cent to 100 per cent over the medium term.

‘Secondly, our fund reduces downside risk by locking in previous positive returns during periods of increased risk. Thirdly, we use ETFs as a more cost efficient and effective way of gaining exposure to underlying asset classes.’