Iain McGowan of Scottish Widows explains how first class service is part of the provider's investment philosophy.
How much money are you managing for clients?
As of the end of December 2016 Scottish Widows was managing £120bn of assets on behalf of our customers. A year earlier, in December 2015, we were managing £112bn. Clearly market growth has helped, but supported over the period by good asset allocation decisions.
How have the events of the last year affected client sentiment?
We saw very little outflow relating to Brexit and indeed most of our multi-asset funds, with contribution from their overseas exposure, did extremely well around this period. So while markets have been helpful in growing our assets under management, our success has also been the result of investing in the right markets on behalf of our customers – which was very much the case during 2016.
Can you tell us something about your investment strategy?
Our goal is to deliver good investment performance at a competitive price. Unlike many of our competitors we don’t have an in-house fund manager. This means we’re impartial when we select fund managers to deliver our investment solutions. This means when we are searching for a fund manager, whether to run our investment mandate or to invest in their fund, we are able to balance two elements – price and capability.
Can you explain more about your team’s expertise?
In Scottish Widows, we focus on getting the investment strategy right, then choosing the managers we think can do the best job for our customers. This means identifying fund managers that can run the fund at a competitive price, taking into account their capability and their experience. We are looking first and foremost for a fund manager who is an expert in the asset class.
How do multi-asset funds fit into this strategy?
Our range of multi-asset funds represent two thirds of the assets invested on behalf of our customers. So of the £120bn invested for our customers, nearly £80bn of that is in multi-asset funds. The asset allocation of these multi-asset funds is set by Scottish Widows’ Asset Allocation team.
How does this affect your choice of manager?
Because Scottish Widows has no in-house manager, we are free to choose a fund manager who will do the best job for that asset class. That means we have multi-asset funds that feature a number of different managers. This is very much true of our Premier Portfolio range.
Are there plans to extend your Premier Portfolio range?
We launched the Premier Portfolios in December 2015 as an alternative to our core range of pension default portfolios, featuring a broader range of asset classes and fund management styles. In the last 12 months we have extended the range of assets available within the Premier Portfolio range. The Premier Portfolios now include commodities and High Yield Bonds and again, we have selected managers that excel in these asset classes.