This Is for Financial Adviser Use Only and Shouldn T Be Relied Upon by Any Other Person

Total Page:16

File Type:pdf, Size:1020Kb

This Is for Financial Adviser Use Only and Shouldn T Be Relied Upon by Any Other Person

This is for financial adviser use only and shouldn’t be relied upon by any other person.

GOVERNED PORTFOLIO 4 ANNUAL REVIEW

Introduction This document provides a rolling annual review of Governed Portfolio 4 and is designed to assist you in preparing your client reports. The information is provided on a sample basis only and you should ensure that your own final version satisfies your compliance requirements. For more information about the Governed Portfolios please visit adviser.royallondon.com/investment.

Investment objective This portfolio aims to deliver above inflation growth in the value of the fund at retirement, whilst taking a level of risk consistent with a moderately cautious or balanced risk attitude over a long time period.

Ongoing governance Governed Portfolio 4 is reviewed quarterly by Royal London’s Investment Advisory Committee (IAC) to make sure it’s performing in line with its objective. The portfolio is invested in a mix of assets shown under current asset allocation. Performance of the portfolio is measured against a benchmark asset allocation, also shown below, which reflects the risk profile and investment timeframe of the portfolio. If the IAC decide that the mix of assets need adjusted it happens automatically on your clients behalf.

Current tactical allocation Benchmark asset allocation

 72.50% RLP Global Managed  67.50% Equity

 17.50% RLP Property  17.50% Property

 6.00% RLP Commodity  5.00% Commodities

 0.50% RLP Global High Yield  1.66% Gilts (15yr)

 0.50% RLP Short Duration Global High Yield  1.67% Index linked Bonds (15yr)

 1.09% RLP Long (15yr) Gilt  1.67% Corporate bonds (15yr)

 0.50% RLP Long (15yr) Index Linked  5.00% Absolute Return Strategies (including cash)

 1.08% RLP Long (15yr) Corporate Bond

 0.33% RLP Deposit

Tactical position as at 11/05/2017.

Performance at 31/12/16 Past performance is not a guide to the future. Prices can fall as well as rise meaning you may not get back the value of your original investment. Investment returns may fluctuate and are not guaranteed.

Percentage Change

31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011 Compound Annual Portfolio Name 31/12/2016 31/12/2015 31/12/2014 31/12/2013 31/12/2012 Growth Rate (%) %Chg %Chg %Chg %Chg %Chg 3 Years 5 Years Governed Portfolio 4 15.08 3.77 8.28 17.22 9.07 8.94 10.56 Composite benchmark 16.89 2.35 8.26 14.77 8.69 9.00 10.06 Difference -1.81 1.42 0.02 2.45 0.38 -0.06 0.50 Source: Lipper, bid to bid, as at 31.12.2016, Royal London, as at 31.12.2016. All performance figures, including the figures shown for the growth in the benchmark, have been calculated net of a 1% annual management charge applicable to the Governed Portfolio. Please note that the Governed Portfolios and their benchmarks are rebalanced on a monthly basis. This is for financial adviser use only and shouldn’t be relied upon by any other person.

Performance at 30/04/17 Past performance is not a guide to the future. Prices can fall as well as rise meaning you may not get back the value of your original investment. Investment returns may fluctuate and are not guaranteed.

Percentage Change

30/04/2016 30/04/2015 30/04/2014 30/04/2013 30/04/2012 Compound Annual Portfolio Name 30/04/2017 30/04/2016 30/04/2015 30/04/2014 30/04/2013 Growth Rate (%) %Chg %Chg %Chg %Chg %Chg 3 Years 5 Years Governed Portfolio 4 16.95 -0.91 12.59 8.19 14.28 9.26 10.03 Composite benchmark 17.57 -1.09 12.04 6.58 14.80 9.21 9.77 Difference -0.62 0.18 0.55 1.61 -0.52 0.05 0.26 Source: Lipper, bid to bid, as at 30.04.2017, Royal London, as at 30.04.2017. All performance figures, including the figures shown for the growth in the benchmark, have been calculated net of a 1% annual management charge applicable to the Governed Portfolio. Please note that the Governed Portfolios and their benchmarks are rebalanced on a monthly basis.

Portfolio Volatility Governed Portfolio 4 targets a specific level of volatility which is shown on the table below.

Volatility Estimated (%) Target (%) Upper bound (%) Lower bound (%) Governed Portfolio 4 12.0 12.5 13.8 11.3

Source: Investment Advisory Committee Report, data as at 31.12.2016. The volatility shown is the forward looking stochastic projection of the annualised volatility of the strategic asset allocation over a 15 year time period.

Governed Portfolios have a fixed risk target with a 10% tolerance either side, i.e. we will always aim to keep the volatility of the strategic asset allocation for Governed Portfolio 4 between 11.3% and 13.8% p.a. A higher portfolio volatility figure indicates we would expect the portfolio to produce a wider range of returns than the target volatility figure while a lower portfolio volatility figure indicates we would expect returns to be more stable than the target volatility figure.

Annual Review Log

Date Details 11/05/2017 With global growth indicators peaking, markets could encounter some volatility over the summer. We have maintained a small overweight in equities and have increased exposure to global high yield as a lower risk way of getting corporate exposure. Within equities, we favour Europe on the back of improved growth indicators and a more stable political outlook. Recent signs of weaker economic activity in China led us to trim back our exposure to commodities. 20/04/2017 We have reduced our exposure to equities ahead of the typically volatile summer months and spread the proceeds across global high yield, property, gilts and cash. We have also added to our holdings in Commodities in order to retain some exposure to a strengthening global economy. The overall change seeks to reduce risk within the portfolio at a time of heightened geopolitical risk. IAC Meeting - Governed Portfolio 4 outperformed benchmark over 5 years to end of December 2016. The existing tactical 28/02/2017 position applied 19/01/2017 continues. No change required to benchmark asset allocation. 19/01/2017 We have further increased our exposure to equities where we favour Japan and remain underweight US and Europe. Commodities should benefit from an improvement in Chinese growth and US dollar strength and we have now taken an overweight position. We remain underweight long dated gilts, corporate bonds and cash and have slightly reduced exposure to Property within this portfolio. 01/12/2016 We have reduced the exposure to equities (-1.25%) and increased the exposure to absolute return strategies (including cash) (0.25%) and 15 year government bonds (1.00%). Overall the asset allocation remains overweight in equity and underweight index-linked bonds, corporate bonds, government bonds and absolute return strategies (including cash). The allocation is neutral commodities, property. IAC Meeting – Governed Portfolio 4 underperformed benchmark over 1 year and outperformed benchmark over 3 and 5 years 01/12/2016 to end of September 2016. The existing tactical position applied 01/12/2016 continues. No change required to benchmark asset allocation. 10/11/2016 We have reduced the exposure to 15 year corporate bonds (-0.25%) and increased the exposure to absolute return strategies (including cash) (0.25%). Overall the asset allocation is now overweight in equity and underweight index-linked bonds, corporate bonds, government bonds and absolute return strategies (including cash). The allocation is neutral commodities, property. 13/10/2016 We have reduced the exposure to absolute return strategies (including cash) (-1.50%) and increased the exposure to equities (1.25%) and commodities (0.25%) Overall the asset allocation is now overweight in equity, corporate bonds and underweight index-linked bonds, This is for financial adviser use only and shouldn’t be relied upon by any other person. government bonds and absolute return strategies (including cash). The allocation is neutral commodities, property and high yield bonds. 15/09/2016 We have reduced the exposure to 5 year index-linked bonds (-0.75%) and 15 year index-linked bonds (-0.75%) and increased the exposure to 15 year corporate bonds (0.75%) and absolute return strategies (including cash) (0.75%) Overall the asset allocation is now overweight in equity and underweight in commodities, government bonds, index-linked bonds and absolute return strategies (including cash). The allocation is neutral property, corporate bonds and high yield bonds. IAC Meeting – Governed Portfolio 4 underperformed benchmark over 1, 3 and 5 years to end of June 2016. The existing 30/08/2016 tactical position applied 11/08/2016 continues. No change required to benchmark asset allocation. 11/08/2016 We have reduced the exposure to 5 year index-linked bonds (-1.50%) and increased the exposure to equities (0.75%) and commodities (0.75%). Overall the asset allocation is now overweight in equity and index-linked bonds and underweight in commodities, corporate bonds, government bonds and absolute return strategies (including cash). The allocation is neutral property. 14/07/2016 We have reduced the exposure to equities (-1.25%) and increased the exposure to 5 year index-linked bonds (1.25%). Overall the asset allocation is now overweight in equity and index-linked bonds and underweight in commodities, corporate bonds, government bonds and absolute return strategies (including cash). The allocation is neutral property. 30/06/2016 We have changed the strategic asset allocation of the Governed Portfolios. We’ve introduced the following new asset types; absolute return strategies including cash, commodities, high yield bonds and gilts. 30/06/2016 We have reduced the exposure to equities (-0.33%), 15 year index-linked bonds (-0.98%), 5 year index-linked bonds (-1.00%) and absolute return strategies (including cash) (-1.94%) and increased the exposure to 15 year government bonds (0.25%). We have also introduced a new allocation to commodities (4.00%). Overall the asset allocation is now overweight in equity and index-linked bonds and underweight in commodities, corporate bonds, government bonds and absolute return strategies (including cash). The allocation is neutral property. 16/06/2016 We have reduced the exposure to 15 year corporate bonds (-0.01%), global high yield bonds (-0.18%) and absolute return strategies (including cash) (-1.31%) and increased exposure to equity (1.50%). Overall the asset allocation is now overweight in equity, absolute return strategies (including cash) and high yield bonds and underweight in corporate bonds and index-linked bonds. IAC Meeting - Governed Portfolio 4 outperformed benchmark over 3 and 5 years to end of March 2016. The existing tactical 14/06/2016 position applied 02/06/2016 continues. No change required to benchmark asset allocation. 02/06/2016 We have reduced the exposure to equity (-1.50%), 15 year corporate bonds (-0.03%), global high yield bonds (- 0.17%) and 15 year index-linked bonds (-0.98%) and increased exposure to absolute return strategies (including cash) (0.43%), 15 year government bonds (0.25%) and 5 year index-linked bonds (2.00%). Overall the asset allocation is now overweight in equity, absolute return strategies (including cash) and high yield bonds and underweight in corporate bonds and index-linked bonds.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration number 302391. Registered in England and Wales number 4414137. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Corporate Pension Services Limited is authorised and regulated by the Financial Conduct Authority and provides pension services. The firm is on the Financial Services Register, registration number 460304. Registered in England and Wales number 5817049. Registered office: 55 Gracechurch Street, London, EC3V 0RL.

May 2017 5Z0262/33

Recommended publications