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Friends Provident gets activ

Friends Provident has designed a unit-linked fund of funds for its group pension range which combines actively managed funds with a passively managed fund.

The activ consensus enhanced fund was designed in response to demand from employee benefits consultants and IFAs for a fund that bridges the gap between active and passive fund management at no extra cost.

This fund aims to outperform the balanced sector over a three-year period. It invests 70 per cent in the Barclays Global Investors historic priced consensus fund, which aims to perform in line with the average UK balanced pension fund by replicating the asset allocation of the Balanced sector.

The remaining 30 per cent is divided between five actively managed funds to boost returns. Baillie Gifford overseas carries a 10 per cent weighting, Investec UK blue chip has a 5 per cent weighting, 1.5 per cent goes into First State global emerging markets leaders and 8.5 per cent is invested in the F&C fixed interest fund.

The actively managed funds were selected on the advice of the Mellon Investment Research unit, which examined the funds in terms of asset class, region and investment themes. The funds will be reviewed on a quarterly basis by Friends Providents corporate pension investment committee. If necessary, the committee will make changes to the mix of actively managed funds and the fund will be rebalance monthly to maintain the 70 per cent passive and 30 per cent active weightings.

This fund could appeal to investors with a corporate Friends Provident pension plan who want the benefits of multi-manager without the high level of costs that can sometimes bring. However, as the core of the portfolio is invested in a passive fund, the funds which make up the actively managed element will have to work hard to lift returns above the sector average.


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