There is increasing need for low-risk pension investments which aim to preserve capital, like the new Stability fund from Aegon.
During the worst of the credit crunch, equity markets fell by 30%1, an experience which left many savers cautious about investing. In addition, new retirement income flexibilities mean that many of those approaching retirement are likely to opt for drawdown. Many such investors will want to preserve existing savings and will not have the luxury of time to recover from investment losses.
Aegon anticipates growing demand for very low volatility funds, which aim to minimise investment losses in turbulent markets while offering potential for steady growth. To meet these needs, Aegon has launched its new Stability Fund which aims to limit falls in negative markets and target long-term returns exceeding cash, specifically 3 month LIBOR rates.
The Stability fund is exclusive to Aegon and will be available across all of its advised propositions with an annual TER of 0.87%. Its primary focus is on capital preservation, using absolute return strategies with the aim of generating growth even in falling markets.
It was designed by Aegon and holds an equal mix of four carefully selected funds: - Fulcrum Diversified Core Absolute Return, the Jupiter Strategic Reserve, Newton Global Dynamic Bond, and Kames UK Equity Absolute Return. This diversified approach offers improved growth potential for the level of risk taken. The fund invests in a mix of UK and overseas equities, bonds, commodities and alternative investments.
Nick Dixon, Investment Director at Aegon said:
“From April 2015, people will have a lot more control over how they manage their money in retirement. This fund will benefit those savers who want to preserve their hard-earned savings pot and are looking for a straightforward solution, conveniently packaged within one fund.
“We’ve carefully selected four quality funds for this portfolio which have complementary risk/return profiles, high levels of liquidity, and investment strategies which focus on minimising market losses. The diversification provided by blending these four managers reduces risk while offering the prospect of growth in excess of cash over the long term. We are confident that this blended approach will offer both reassurance and growth to savers wary of the downside risks of investing their retirement savings.”
There’s no guarantee that the fund’s objectives will be met. The value of this investment may go down as well as up and investors may get back less than originally invested.
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