Governed Retirement Income Portfolio 1 Annual Review
This is for financial adviser use only and shouldn’t be relied upon by any other person.
GOVERNED RETIREMENT INCOME PORTFOLIO 1
ANNUAL REVIEW
Introduction
This document provides a rolling annual review of the Governed Retirement Income Portfolio 1and is designed to assist you in preparing your client reports. The information is provided on a sample basis only and you should ensure that your own final version satisfies your compliance requirements. For more information about ourGoverned Retirement Income Portfolios please visit adviser.royallondon.com/investment.
Investment objective
This portfolio aims to deliver growth above inflation to support regular income withdrawals, whilst taking a level of risk consistent with a risk rating 1 risk attitude.
Ongoing governance
Governed Retirement Income Portfolio 1 is reviewed quarterly by Royal London’s Investment Advisory Committee (IAC) to make sure it’s performing in line with its objective. The portfolio is invested in a mix of assets shown under current asset allocation. Performance of the portfolio is measured against a benchmark asset allocation, also shown below, which reflects the risk profile of the portfolio. If our experts decide that the mix of assets needs to be adjusted, it happens automatically on your behalf, you don't need to do anything. What's more, this service comes at no extra cost.
Current Asset Allocation Benchmark Asset Allocation
/ 5.00% / RLP Property
/ 5.00% / RLP Commodity
/ 2.50% / RLP Global High Yield
/ 1.50% / RLP Short Duration Global High Yield
/ 2.50% / RLP Sterling Extra Yield Bond
/ 18.50% / RLP Medium (10yr) Gilt
/ 20.00% / RLP Medium (10yr) Index Linked
/ 21.00% / RLP Medium (10yr) Corporate Bond
/ 3.00% / RLP Absolute Return Government Bond
/ 8.55% / RLP Cash Plus
/ 1.45% / RLP Deposit
Tactical position as at 16/08/2018.
Performance at 31/07/18
Past performance is not a guide to the future. Prices can fall as well as rise meaning you may not get back the value of your original investment. Investment returns may fluctuate and are not guaranteed.
Percentage Change31/07/2017 / 31/07/2016 / 31/07/2015 / 31/07/2014 / 31/07/2013 / Compound Annual / Since launch
Portfolio Name / 31/07/2018 / 31/07/2017 / 31/07/2016 / 31/07/2015 / 31/07/2014 / Growth Rate (%)
%Chg / %Chg / %Chg / %Chg / %Chg / 3 years / 5 years / % Chg*
GRIP 1 / 2.42 / 5.58 / 6.64 / 5.65 / 3.55 / 4.86 / 4.75 / 32.74
Composite Benchmark / 1.75 / 3.54 / 7.55 / 6.22 / 2.78 / 4.25 / 4.34 / 28.85
Difference / 0.67 / 2.04 / -0.91 / -0.57 / 0.77 / 0.61 / 0.41 / 3.89
*Governed Retirement Income Portfolio 1 launched on 28 August 2012.
Source: Lipper, bid to bid, as at 31.07.2018, Royal London, as at 31.07.2018. All performance figures, including the figures shown for the growth in the benchmark, have been calculated net of the annual management charge applicable to each fund.Please note that the Governed Retirement Income Portfolios and their benchmarks are rebalanced on a monthly basis.
Performance at 30/06/18
Past performance is not a guide to the future. Prices can fall as well as rise meaning you may not get back the value of your original investment. Investment returns may fluctuate and are not guaranteed.
Percentage Change30/06/2017 / 30/06/2016 / 30/06/2015 / 30/06/2014 / 30/06/2013 / Compound Annual / Since launch
Portfolio Name / 30/06/2018 / 30/06/2017 / 30/06/2016 / 30/06/2015 / 30/06/2014 / Growth Rate (%)
%Chg / %Chg / %Chg / %Chg / %Chg / 3 years / 5 years / % Chg*
GRIP 1 / 2.57 / 7.00 / 5.83 / 5.24 / 4.60 / 5.11 / 5.03 / 32.70
Composite Benchmark / 1.51 / 5.49 / 6.82 / 5.37 / 3.83 / 4.58 / 4.59 / 28.59
Difference / 1.06 / 1.51 / -0.99 / -0.13 / 0.77 / 0.53 / 0.44 / 4.11
*Governed Retirement Income Portfolio 1 launched on 28 August 2012.
Source: Lipper, bid to bid, as at 30.06.2018, Royal London, as at 30.06.2018. All performance figures, including the figures shown for the growth in the benchmark, have been calculated net of the annual management charge applicable to each fund. Please note that the Governed Retirement Income Portfolios and their benchmarks are rebalanced on a monthly basis.
Annual Review Log
Date / DetailsIAC Meeting – 29/08/2018 / Each Governed Retirement Income Portfolio continues to be appropriate for its risk profile and investment objective.
16/08/2018 / A currency crisis in Turkey has rattled global stock markets. Before the selloff, our multi asset funds were already positioned relatively defensively, with the smallest overweight in equities since 2012 and favouring the US over emerging markets. We continued to reduce exposures to stocks and commodities, bringing the latter allocation into line with the benchmark, and lowered holdings of cash. The proceeds were moved into government bonds and short duration high yield debt. We will look to repurchase stocks in coming months. We are modestly overweight global equities and short dated global high yield bonds.
12/07/2018 / Our Investment Clock may enter its ‘Stagflation’ phase during summer, as inflation tracks slightly higher while global growth cools, especially outside the US. Stocks are flat year-to-date after a burst of volatility that marked a global growth peak; a deteriorating economic backdrop and talk of trade wars signal further volatility. We continued to take profits on our equities position, where the overweight is the lowest since 2012, and reduced our overweight commodities allocation; the proceeds were moved into government bonds and cash, reducing underweights. We are modestly overweight global equities, global high yield bonds and commodities.
07/06/2018 / Our Investment Clock remains in its ‘Overheat’ phase, with greater risk of inflation, although there are indications of economic weakness outside the US. We expect stocks to trade in a range over summer; investor sentiment, having been very fearful in February, is now neutral. After capitalising on weak markets in the first quarter to increase equity exposures, we have been taking profits on our overweight position as prices recovered, moving the proceeds into cash. Longer term, we remain positive on stocks but more cautious on government bonds. We are moderately overweight global equities, global high yield bonds and commodities.
IAC Meeting – 05/06/2018 / Each Governed Retirement Income Portfolio continues to be appropriate for its risk profile and investment objective.
10/05/2018 / Our Investment Clock remains in its ‘Overheat’ phase, with increased risk of inflation, although the global economy is showing some signs of slowing. With investor sentiment staying neutral, we have taken further profits on the extra equities purchases made during the market lows; we also reduced the overweight allocation to commodities. Proceeds of these sales were moved into government bonds and cash. Longer term, we remain positive on stocks and are overweight global equities, global high yield bonds and commodities.
19/04/2018 / Our Investment Clock remains in the early stages of its ‘Overheat’ phase, with a robust worldwide economic expansion and increased risk of inflation. Following considerable volatility in markets in recent weeks, portfolio activity focused on risk management. We have again increased the allocation to 10-year conventional government bonds, albeit the exposure remains an underweight; this was funded by reducing our overweight holding of equities and from cash. With economies continuing to expand and inflation remaining benign, we are overweight global equities, global high yield bonds and commodities.
08/03/2018 / Our Investment Clock is in the later cycle ‘Overheat’ stage, with strong global growth and more risk of inflation. We have added to equities again, capitalising on stock market weakness and given that supportive world growth conditions remain in place. We also have increased the allocation to conventional 10-year gilts. The changes were funded out of high yield debt and cash. With economies continuing to expand and inflation remaining benign, we are overweight global equities, global high yield bonds and commodities.
IAC Meeting – 01/03/2018 / Each Governed Retirement Income Portfolio continues to be appropriate for its risk profile and investment objective.
08/02/2018 / As our Investment Clock moves further into ‘Overheat’ territory, we have added to equities at the margin and also added to commodities again, funded out of bonds. While the supply-demand balance is favourable for commodities, potential for weaker demand in China, the world’s biggest consumer of raw materials, is a concern. The sell-off in equities that began at the end of January seems exaggerated, and we are buying at lower levels, in expectation of a recovery in coming months as the world economy keeps expanding. We will look to maintain an overweight allocation to stocks.
18/01/2018 / A combination of our ‘Investment Clock’ moving further into ‘Overheat’ and positive price momentum mean that we have added to commodities at the margin, funded out of bonds. Nevertheless, we remain cautious on commodities as the Chinese economy is likely to slow, and recent US dollar weakness could reverse, in line with interest rate differentials. We slightly increased the position in high yield bonds. We will look to maintain our overweight position in stocks; with investor sentiment so positive, we do not rule out a short-term set-back and we would use such an opportunity to increase our equity allocation.
IAC Meeting – 01/12/2017 / Each Governed Retirement Income Portfolio continues to be appropriate for its risk profile and investment objective.
16/11/2017 / There are signs that growth is picking up, against a backdrop of loose monetary policy and low inflation. Against such a backdrop, central banks are unlikely to tighten in a meaningful way; this is positive for stocks and high yield, where we remain overweight. With seasonality now positive, we are likely to buy dips in stock markets rather than sell rallies. We’ve marginally increased our underweight in bonds and taken some profits in high yield. We have added to commodities at the margin.
12/10/2017 / We have taken new positions in absolute return and cash strategies, commodities and gilts and significantly reduced our holdings in UK high yield bonds and index linked gilts. We have also increased our holdings in property, corporate bonds, global high yield and short duration high yield. This broader mix of assets increases the diversification of the portfolio.
12/10/2017 / We have changed the strategic asset allocation of the GRIPs. We’ve introduced the following new asset types; absolute return strategies including cash, commodities, high yield bonds and gilts.
14/09/2017 / We took advantage of bouts of risk aversion on heightened geopolitical risk surrounding North Korea and extreme weather events in the US to add to the Fund’s overweight in equities. We slightly decreased the Fund’s exposure to bonds given current low bond yields. We maintained the exposure to global high yield bonds as a lower risk way of gaining corporate exposure with some income. Property exposure was kept in line with the benchmark.
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. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration number 302391. Registered in England and Wales number 4414137. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Corporate Pension Services Limited is authorised and regulated by the Financial Conduct Authority and provides pension services. The firm is on the Financial Services Register, registration number 460304. Registered in England and Wales number 5817049. Registered office: 55 Gracechurch Street, London, EC3V 0RL.
September 20185LT0463/21