retirement planning

Premier Pension Portfolio Funds

Premier Pension Portfolio Funds: Aiming for Potentially Higher Returns through Wider Diversification


Our family of competitively priced, expertly managed, multi-asset portfolio funds can meet a variety of your clients’ needs. Our Premier Pension Portfolio Funds aim to offer potentially higher returns with similar levels of risk compared to the equivalent Pension Portfolio Funds.
 

Premier Pension Portfolio Funds 0.4%*

Marking an evolution in our multi-asset approach, we launched our Premier Portfolios as stand-alone investment options in 2017 (they were also available as life-styling options from 2016). Our range of 8 Premier Portfolio funds builds on the foundation of our original Pension Portfolios, being designed to meet the growing need for a range that offers pension clients potentially higher returns for similar levels of risk.
 

How these funds can help your clients

The introduction of Pension Freedoms has led to a growing need in the market for more choice. Clients now demand more from their pensions, with an increased focus on how to maximise the growth potential of their pension and level of net returns. Our Premier Portfolios offer your clients the opportunity for potentially better ‘risk-adjusted’ returns compared to the equivalent Portfolio Funds by using a broader range of asset classes, a degree of active management and more specialised investment strategies.

 

More investment strategies and greater diversification

Using a greater number of investment strategies allows for greater diversification than our original Pension Portfolios. Using more, and diverse, asset classes has the potential to help generate returns in a wider variety of market conditions and can minimise the impact of a large fall in any one asset class on clients’ investments. As the below table shows, a top-performing asset class in one year can be left behind the next:

 

Annual asset class returns over 10 years
 


 


Innovative investment strategies

In relation to equity allocation, the Premier Portfolios primarily invest through alternatively weighted strategies. The underlying funds use passive investment strategies designed to deliver higher risk-adjusted returns than traditional market-capitalisation-weighted indices, taking into account wider attributes of underlying companies than their market capitalisation alone. 

These strategies aim to reduce the weighting to fully or over-valued stocks and increase the weighting of undervalued ones. In contrast, the original Pension Portfolios’ equity allocation is invested entirely through market-capitalisation-weighted tracker funds. 

The primary equity strategies we use in the Premier Portfolios are:

  • Fundamental Indexing – which weights shares of companies based on fundamental values such as sales or cashflow
  • Low Volatility – a type of fundamental indexing which tracks an index of stocks with historically low volatility.

 

Premier approach to asset allocation

The asset allocation for the Premier Portfolios was determined using modelling tools to test a variety of asset classes under a wide range of market conditions. 

We will review the components of the Premier Portfolios as the strategic asset allocation of the Pension Portfolios changes.

 

Performance 

You can see below how Premier Pension Portfolios have performed since launch. No asset class was spared the market declines associated with COVID-19 in the first quarter of 2020. However, multi-asset portfolios invested in a range of assets generally fared better than single-class equity funds.

Annualised performance for periods to 31st March 2020. All figures relate to Series 4 (net of charges). Inception date - December 2015.

Past performance is not a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise. Investors may not get back the full amount originally invested.

 

PERFORMANCE OF THE ABI (ASSOCIATION OF BRITISH INSURERS) SECTORS

You can see how major mixed-asset sectors have performed over the same term below. While the Premier Portfolios underperformed in the shorter term, over the longer term (since inception in December 2015) they have performed better than their peer group.


Through their diverse range of asset classes, the Premier Portfolio Funds offer the potential for higher returns with similar levels of risk to our core Pension Portfolio range.

For more information on Retirement Account’s strong investment options visit: www.scottishwidows.co.uk/multi-asset

*Total Annual Fund Charge (TAFC)

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