Targeting annuity purchase in lifestyle strategies isn’t anything new but we’ve just lifted the bonnet and injected an enhancement shot into the end-point of these solutions.
The recent volatility has shot short-term volatility into equity markets and painted a very turbulent backdrop but we’re also equally faced with a stressed fixed interest environment.
This can present issues in the latter years of lifestyle strategies that significantly increase the allocation to fixed interest investments to hedge annuity rates and provide inflationary protection.
Rather than sit still and do nothing, we’ve gone back to the design board and made a tweak to the investment mix used in the final five years of our annuity strategies in an attempt to produce stronger growth and better outcomes for customers in these strategies. This includes our investment default; the Balanced Lifestyle Strategy (Annuity).
Instead of targeting an end point of 75 per cent index linked, 25 per cent cash, we’re now targeting the RLP Annuity fund 100 per cent at retirement date. This is more diversified and flexible than the previous mix. It utilises four asset classes (corporate bonds, cash, index linked and gilts) instead of two and benefits from a tactical overlay meaning we can try and add short-term value by taking advantage of market opportunities.
Fusing expertise and flexibility
The fund has been designed exclusively for use as an end point in the Target Annuity Strategies and benefits from a co-manager approach. Jonathan Platt (Head of Fixed Interest at Royal London Asset Management) is the lead manager with Trevor Greetham (Head of Multi Asset at RLAM) co-manager. This means that the fund benefits from the expertise of an established fixed interest manager and the proven track record of a tactical strategy manager.
We believe that this change can provide better outcomes for customers targeting annuity purchase and what’s more, we’re targeting the same level of risk that the previous mix targeted.
We don’t just target annuities though
We recognise that not everyone wants to target an annuity and that’s why we offer a choice of three different retirement end-points in our range of Target Lifestyle Strategies. As well as annuity, we also offer options targeting cash and drawdown.
Our Target Drawdown Strategies were introduced in April and create a link between our Governed Portfolios and our Governed Retirement Income Portfolios (GRIPs). The GRIPs remain the only Centralised Investment Proposition (CIP) designed exclusively for taking income from. What’s more, they now have over a three year track record in delivering appropriate risk and performance.
So if you’re looking for a suite of risk-graded strategies packed full of flexibility and innovation and backed by a proven track record, then look no further.