The product director for Aegon UK’s unit-linked guaranteed products said the funds have been constructed to cater for people approaching, at, or in, retirement who are looking to guarantee a level of income or a capital amount, and who want to balance potential growth with an additional risk management overlay.
| Key Features |
| Managed Risk Portfolio Defensive will target a volatility level of 5 per cent.Managed Risk Portfolio Cautious will target 7 per cent volatility.Managed Risk Portfolio Balanced will target 9 per cent volatility.The portfolios have an AMC of 0.1 per cent to 0.2 per cent. Admin charges are 0.5 per cent to 0.95 per cent. |
Given these parameters, BlackRock, the fund manager for the MRPs, will aim to target volatility at or close to these levels in order to limit the impact of any sharp market fluctuations, and will make daily adjustments to the asset allocation of the portfolios in order to bring net volatility back to the required limit.
According to Aegon UK, the equity allocation is uncapped and exposure may change significantly over time because these portfolios are not limited to a pre-defined investment mix.
Mr Bell added: “The beauty of these funds is that they are managed to stay close to given target levels of risk: not only do they reduce the impact of falling markets on account values in more volatile times, they support attractive income and capital guarantees, which are highly valued by customers close to or in retirement.”
Adviser View:
Will Palmer, director of ProAktive, in Doncaster, said: “Targeting volatility in and of itself rather misses the point, as we have seen huge swings in prices this year so far on relatively low volatility levels.
“Additionally, negative is the corollary effect of having to make daily adjustments to investment positions, which usually results in investors investing at the top and selling at the bottom.”
He said that for investors who are so close to retirement, it would be much wiser to take a longer-term view by choosing a basic portfolio and sticking with it, “rather than chopping in and out of markets as these portfolios seem to imply”.
