The product will be offered to investors as an ongoing ‘core position’ alternative to traditional mutual funds and index trackers by offering accelerated returns from the world’s leading stock markets, with reduced risk.

The AAA Growth Plan II allows investors to select their own asset allocation to the US, the UK, Europe or Japanese stock markets structured over a six-year term, and provides 100 per cent contingent capital protection at maturity.

The plan builds on the success of AAA Growth Plan I, launched in February, which offered investors the ability to construct their own portfolio asset allocation and increased risk control through 100 per cent capital protection at maturity, contingent upon 50 per cent downside barriers in each market.

Blue Sky believes the plan represents a major challenge to the rationale of investing in mainstream mutual funds, passive tracker funds - or even hedge funds.

By design, the worst-case scenario for the AAA Growth is the best-case scenario of a tracker fund – which is one-for-one risk if the selected market, or markets, falls by more than 50 per cent.

In virtually every other scenario - other than the markets staying at zero or growing by exactly 60 per cent - the plan provides unlimited outperformance potential and, unlike traditional mutual funds or hedge funds, which are subject to the vagaries of individual fund manager performance, can never underperform benchmark indices.

The capital protection, which allows for markets to fall by up to 50 per cent at any point without risk to capital, is a major advantage over actively managed funds and trackers and a feature likely to prove attractive to more cautious investors, including cash investors who can now transfer cash ISAs into stocks and shares ISAs

Chris Taylor, chief executive at Blue Sky Asset Management, says, ‘The outlook for global economic growth is challenging to forecast in the short term and current stock market volatility and uncertainty means it is especially difficult for investors to see where the strong gains seen in most markets over the past five years will come from in the foreseeable future.

‘The AAA Growth Plan II offers an innovative and timely solution to the key investor concerns – an opportunity to asset allocate a portfolio that maximises the scope for upside performance in each of the main equity markets while benefiting from significantly reduced market risk. Given the plan’s potential to outperform the underlying indexes in virtually all scenarios, it puts a serious question mark over the rationale for investing in these equity markets through mainstream actively managed mutual funds - while the challenge to passive funds is even more clear-cut.’

For more information visit www.bluesky-am.co.uk