Britain's biggest government-owned bank, RBS, is entering the arena of retail fund management to mitigate risk.

RBS will launch two new funds, viz. Volatility Controlled Cautious Managed Fund and Volatility Controlled Balanced Managed Fund.

According to figures revealed by Investment Management Association, these funds have more than £40 billion of UK retail investor money. The figure represents more than 7 per cent of Britain’s total retail fund investments.

Cautious Managed intends never to surpass 10 per cent annual volatility, while Balanced Managed intends to keep volatility in the range of 10-15 per cent.

Cautious fund will be launched with 54 per cent in equities, 40 per cent in bonds, 5 per cent in commodities and 1 per cent in property equities. Balanced fund will have 71 per cent in equities, 14 per cent in bonds, 10 per cent in equities and 5 per cent in commodities.

Steven Brown, the chief of intermediary fund sales said, "The key focus for us is to create something which a client can come in on day one to a cautious vehicle which remains cautious for its life through the taming of volatility.”

RBS believes it is a high time to make its first foray into retail fund management as research showed that 2.6 million people in the country are looking to make more investments in the stock market and these funds are popular.