Changes to our Governed Range

We've made changes to the Strategic Asset Allocation (SAA) of our Governed Portfolios and Governed Retirement Income Portfolios with the aim of improving risk adjusted returns for our customers.

Our Governed Range consists of risk targeted portfolios and lifestyle strategies. Providing employees with an opportunity to invest in UK and global financial markets within a risk managed framework along with a consistent investment approach that is regularly monitored by our Investment Advisory Committee and automatically updated at no extra cost.

Strategic Asset Allocation

Our strategic asset allocation represents our long term view of an efficient asset mix for each portfolio and is reviewed regularly by the Investment Advisory Committee. A formal review is carried out every 3 years and ensures that portfolios remain appropriate for their long-term objectives which are designed to optimise returns taking an appropriate level of risk. This is based on appropriate risk metrics for each portfolio and uses a combination of quantitative results and qualitative pragmatic investment experience.

The SAA review in 2020 has resulted in the following changes being made:

  • Governed Portfolios - an increase in our allocation to high yield bonds and a reduction in property.
  • Governed Retirement Income Portfolios 1 and 2 - an increase in equities and high yield bonds and a reduction in gilts, index linked gilts and corporate bonds.
  • Increasing our exposure - to emerging and developed market equities and reducing our UK equity exposure.

Why are we making these changes?

We are increasing our allocation to high yield bonds and reducing property for two reasons:

  • To increase our allocation to more global markets.
  • To increase the overall liquidity of the portfolios.

We are increasing our allocation to global developed and emerging market equities in order to gain access to faster growing sectors and economies with a view to producing stronger returns for the portfolios.

What's changing?

The new Governed Portfolio strategic asset allocations are shown below, along with how these have changed.

 CautiousBalancedAdventurous
 GP1GP2GP3GP4GP5GP6GP7GP8GP9
Equity 52.5% 42.5% 15.0% 67.5% 55.0% 32.5% 80.0% 70.0% 45.0%
Property 15.0% 10.0% 5.0% 15.0% 12.5% 10.0% 12.5% 12.5% 10.0%
Commodities 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
GHY 5.0% 5.0% 10.0% 2.5% 5.0% 5.0% 2.5% 2.5% 2.5%
Gilts 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
IL Gilts 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
Corporate Bonds 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
Cash 7.5% 10.0% 15.0% 5.0% 7.5% 12.5% 0.0% 5.0% 10.0%
 CautiousBalancedAdventurous
 GP1GP2GP3GP4GP5GP6GP7GP8GP9
Equity - - - - - - - - -
Property -2.5% -2.5% - -2.5% -2.5% -2.5% -2.5% -2.5% -
Commodities - - - - - - - - -
GHY 2.5% 2.5% - 2.5% 2.5% 2.5% 2.5% 2.5% -
Gilts - - - - - - - - -
IL Gilts - - - - - - - - -
Corporate Bonds - - - - - - - - -
Cash - - - - - - - - -

Please note that GHY stands for Global High Yield Bonds and IL Gilts for Index Linked Gilts.

The new Governed Retirement Income Portfolio strategic asset allocations are shown below, along with how these have changed.

 GRIP1GRIP2GRIP3GRIP4GRIP5
Equity 12.5% 22.5% 30.0% 40.0% 50.0%
Property 5.0% 7.5% 7.5% 10.0% 10.0%
Commodities 5.0% 5.0% 5.0% 5.0% 5.0%
Global HY 6.3% 6.3% 6.3% 7.5% 8.8%
UK HY 6.3% 6.3% 6.3% 7.5% 8.8%
Gilts 16.7% 12.5% 10.0% 5.0% 2.5%
IL Gilts 16.7% 12.5% 10.0% 5.0% 2.5%
Corporate Bonds 16.7% 12.5% 10.0% 5.0% 2.5%
Cash 15.0% 15.0% 15.0% 15.0% 10.0%
 GRIP1GRIP2GRIP3GRIP4GRIP5
Equity +2.5% +2.5%      
Property          
Commodities          
Global HY +3.75% +2.5%      
UK HY +3.75% +2.5%      
Gilts -3.3% -2.5%      
IL Gilts -3.3% -2.5%      
Corporate Bonds -3.3% -2.5%      
Cash          

Please note that Global HY stands for Global High Yield Bonds, UK HY for UK High Yield Bonds and IL Gilts for Index Linked Gilts.

Its important to remember that the value of investments can go down as well as up and your employees may not get back the full amount of capital they originally invested. Investment returns may fluctuate and are not guaranteed.

What do these changes mean for employees?

The changes have already taken place and were made automatically, as part of our ongoing governance service, at no extra charge.

By investing in our governed range employees continue to benefit from:

  • Experts monitoring and updating their investment at no extra charge
  • Access to a diverse range of assets
  • Investments designed to suit whatever life stage they’re at and their attitude to risk
  • Easy online access to help them keep an eye on their investments
  • Investment options that are designed to be resilient

For more information on the changes to our Governed Range, please view our Governed Range factsheets.

Questions

If you’ve got any questions, your usual Royal London dedicated servicing team will be happy to help you.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.