Aegon has introduced its Stability Fund – an equally weighted combination of four existing funds. The fund will be available across all of Aegon’s advised propositions with an annual total expense ratio of 0.87 per cent.
An equal weighting of the Fulcrum Diversified Core Absolute Return, the Jupiter Strategic Reserve, Newton Global Dynamic Bond, and Kames UK Equity Absolute Return funds will make up the portfolio’s allocation.
Asset allocation through the funds includes equities, fixed income, property-related securities, transferable securities, cash, collective investment schemes, fixed interest, convertibles, futures, and alternative strategies.
Anticipating an increase in demand for low volatility funds due to the upcoming retirement freedoms, Aegon launched the fund with the objective of minimising investment losses in turbulent markets while offering the potential for steady growth.
Nick Dixon, investment director at Aegon, called the four funds complementary to one another in their risk and return profiles. The fund aims to limit falls in negative markets and target long-term returns exceeding cash, specifically three-month Libor.
Capital preservation is the goal of the fund, investing in lower risk asset classes in order to minimise the risk of loss and keep the value above three-month Libor rate. The fund has a TER of 0.87 per cent.
Aegon has predicted retirees will be looking for new investment options for their lump sum savings following the pension reforms.
With the retirement freedoms soon coming into effect, many will want to preserve existing savings as they will not have the time to recover from losses.
The largest fund within the portfolio is the £1bn Newton Global Dynamic Bond fund, which allocates primarily to global government, corporate and high yield fixed interest. Managed by Paul Brain, it returned 1.71 per cent between 2013 and 2014.
It can be difficult for some investors to choose a diversified fund to look after their investments, especially for those just starting out. But multi-manager funds offer clients access to multiple investment strategies through a single fund.
Different markets require a different set of skills to navigate, so having multiple funds within one helps to mitigate any associated volatility and increase the prospects for growth.
Multi-manager funds make this diversification across multiple managers and asset classes a cost-efficient process. Putting money into various funds with different portfolios and investment styles individually would be far more expensive as the client would have to pay multiple management fees as opposed to just one.