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A CLEAR AND SIMPLE GUIDE Investments Pension Investment Options royallondon.com CONTENTS 2 Royal London – who we are and what we do 3 Decisions needn’t be difficult 4 Your pension investment options 5 Understanding risk 6 Balancing your investment options 8 Asset classes explained 10 A strong governed range 13 Avoiding the unexpected 14 Choosing your own investments 19 Fund range 21 WHO WE ARE AND WHAT WE DO Ever since we started as a friendly society over 150 years ago, at Royal London we believe that our difference is our strength, and that there’s strength in everyone. That’s one reason why today, we’re the UK’s largest mutual life and pensions company. And it’s also why, whoever you are and whatever your aims, whether it’s pensions, insurance or wealth management, we look to provide you with great long-term value and first class service and support at all times. 3 DECISIONS NEEDN’T BE DIFFICULT Today there are more investment choices available than ever before. While choice is a good thing, you may find it difficult to decide on the best option for you. That’s why we’ve put together this guide to choosing your pension investments. It sets out the options available to you when you invest in a Royal London pension and some of the points to consider when making your decision. What we can’t do here is take your personal circumstances into account. So if you’re still unsure what to do after reading this, you should talk to a financial adviser. Advisers may charge for providing advice and should confirm any costs beforehand. 4 YOUR PENSION INVESTMENT OPTIONS Royal London offers a comprehensive range of investment options to help provide the best opportunity to grow your retirement savings. We’ve also designed the range to help you balance the level of risk you’re willing to take with the potential rewards you want to achieve. You have two main options*: • You can invest in one of our specially developed risk-graded portfolios or lifestyle strategies from our Governed Range. • Alternatively, you can create and manage your own investment strategy by selecting from our Fund Range. Remember that the value of investments can go down as well as up and you could get back less than the amount paid in. This guide explains the different options available within the Governed Range. They are designed for those who prefer to select a ready-made investment that we review on an on-going basis for added peace of mind. If you prefer to pick your own funds and have more control over your investments, this guide also shows you how to do this. We list the funds available and give you some information about each one. Whichever option you choose, there are a number of points you should consider before you proceed – we’ve listed these on pages 19 and 20. At any time during your plan you can change your investments by switching to another investment option available in our range. One point you should consider is your attitude to risk. This will play a big part in determining the mix of investments that’s right for you. If you prefer to pick your own funds and have more control over your investments, this guide also shows you how to do this. *Additional options, including a fund supermarket and direct investment in stocks and shares, are also available exclusively with our Pension Portfolio personal pension. Additional charges apply for these investments. For details, please see our Pension Portfolio Customer Guide. 5 UNDERSTANDING RISK Everybody’s view of risk is different. Some people are comfortable taking risks while others are naturally more risk-averse. You may already know your attitude to risk, but if not, don’t worry. We can help give you an idea of what it is. Simply complete our online risk questionnaire at royallondon.com/pensioninvestments All you have to do is answer twelve simple questions about your current situation, feelings and attitude to risk. We then produce a report which confirms your answers and gives you an idea of your risk category. We have seven possible risk categories – you’ll find these opposite. 6 Understanding how you feel about levels of risk is one of the most important factors when choosing the right investment. It means you can aim to maximise returns in a way you’re comfortable with. Below, we’ve identified seven different categories for you to consider. RISK CATEGORY Very Cautious Moderately Adventurous Knowing your capital is safe is more important to you than high returns. You aren’t comfortable with the thought of investing in the stock market and would rather keep your money in the bank. You’re willing to take on investment risk and understand that this is crucial in terms of generating long-term returns. You’re willing to take a risk with a substantial proportion of your available assets. Cautious Adventurous You generally don’t like to take risk with your investments. You would prefer to keep your money in the bank, but would be willing to invest in other types of investments if they were likely to be better for the longer term. You’re happy to take on investment risk and understand that this is crucial in terms of generating long-term returns. You’re willing to take a risk with most of your available assets. Moderately Cautious You’re looking for the highest possible return on your capital and are willing to take considerable amounts of risk to achieve this, usually with all of your available assets. You’re usually uncomfortable taking risk with your investments, but would be willing to do so to a limited extent. You realise that risky investments are likely to be better for longer term returns. Very Adventurous Balanced You appreciate that you have to take investment risk in order to be able to meet your long-term goals. You’re willing to take a risk with at least part of your available assets. 7 BALANCING YOUR INVESTMENT OPTIONS Our aim is to maximise your investment returns in line with your attitude to risk. We do this by focusing on asset allocation. This means creating a balance of investments from the various asset classes available. So, for example, if you had a ‘Balanced’ attitude to risk, you might invest in a mix of assets such as property, cash deposits and equities, also known as shares. Because these asset classes perform differently, if one type is falling in value, others may be rising. 8 Getting this balance right can make a huge difference to how your investments perform. However, it’s not just about getting the asset allocation right at the start. Over time, returns between different asset classes will vary, which means the percentage invested in each asset class will also change. So it’s important to review the asset allocation regularly to make sure it still matches your risk attitude. If this all sounds a bit complicated and too much like hard work, you might prefer to invest in our Governed Range. This consists of ready-made model portfolios and lifestyle strategies designed to automatically deal with these types of issues. 9 ASSET CLASSES EXPLAINED 10 Some of our investment options hold a mix of assets, such as company shares, bonds, property and cash. Others may invest in a single type of asset. We’ve summarised the main asset types below. Deposits This term is used to describe investments such as cash. They work in much the same way as a bank or building society account. Investments are put on deposit with a financial institution where they earn interest. Deposits are generally considered safer than other asset classes; however, there may be times when the rate of return is lower than the charge applied to the policy. Corporate bonds and gilts Corporate bonds are loans to companies for a set period. During this period the company pays interest and eventually returns the original amount. The main risk with a corporate bond is that the company to which the loan has been made might go bankrupt and fail to pay it back. Corporate bonds tend to be less volatile investments than company shares, but provide the opportunity for higher growth than deposits. Gilts are loans to the Government and work in much the same way as corporate bonds. However, gilts are considered very safe investments, since the Government is unlikely to go bankrupt. To date, the British Government has never defaulted on a gilts issue. Like corporate bonds, gilts tend to be less volatile than company shares but provide greater opportunities for growth than deposits. Property There are two main types of property funds: Direct property funds invest in bricks and mortar properties such as retail outlets, industrial sites and office buildings. One proviso: because the property in a fund may not be readily saleable, it’s possible that you might not be able to cash in your investment in a property fund when you want to. Also the value of property is generally a matter of a valuer’s opinion rather than fact. Property security funds invest in Real Estate Investment Trusts and shares in property companies. These funds typically experience short-term price movements similar to equity funds but would be expected to have characteristics similar to direct property funds over the longer term. They are also less likely to place restrictions on cashing in your investment than direct property funds. Equities Equities are company shares. Limited companies can sell their shares to raise capital, paying a share of their profit (known as a dividend) to the buyer in return. Shares are bought and sold on the stock market, and their prices fluctuate based on a number of factors including the company’s potential profitability. As a result, they tend to be too volatile for short-term investors. However, it’s widely accepted that equities have the potential for better returns over medium and longer terms. It’s also worth bearing in mind that equities traded on some overseas stock exchanges can be more volatile than UK equities. They are also affected by fluctuations in currency exchange rates. Mixed assets Some funds will invest in a mixture of different asset classes, such as company shares, property and deposits. This way, if one particular investment performs poorly, you won’t be as badly affected because your risk is spread more widely. Specialist Some funds have an investment universe that is not accommodated by the mainstream sectors. These will be included in the specialist sector. This sector is hugely diverse and will contain funds with various investment objectives and styles. If you’ve read this and decided that taking charge of your investments is right for you, you’ll find a list of the funds you can choose from on pages 22-27. 11 12 A STRONG GOVERNED RANGE We explained earlier why it’s important to match your asset allocation to your risk attitude. The Governed Range does this for you. Each option has been designed for a particular risk attitude, which means we take care of the asset allocation for you. However, if you’re in either the ‘Very Cautious’ or ‘Very Adventurous’ category you should seek more specialist advice from your adviser. All of our options in the Governed Range have on-going governance. This simply means that our investment experts review it regularly. It allows us to maintain an appropriate asset allocation to match your risk attitude – and to make sure it’s performing in line with its objectives – aiming to maximise real returns for the level of risk taken. Please note that investment returns may fluctuate and are not guaranteed. If our experts decide that a change to the asset allocation should be made, it will take place automatically on your behalf; you don’t need to do anything. What’s more, this service comes at no extra cost. 13 AVOIDING THE UNEXPECTED Governed Portfolios The Governed Portfolios are a range of nine mixed asset portfolios which are suitable for different risk categories and terms to retirement. You can invest in any of the nine Governed Portfolios individually. It is important to remember that as time passes the amount in each fund will grow at different rates. This could change the suitability of your chosen Governed Portfolio. To avoid this we’ll automatically rebalance your funds on a monthly basis. This means the mix of funds within the portfolio which matched your original attitude to risk and time to retirement is maintained. This service as well as the ongoing governance doesn’t cost you anything extra. You can find out more by viewing our portfolio factsheets at royallondon.com/pensioninvestments 14 Governed Lifestyle Strategies The Target Cash, Target Annuity and Target Drawdown strategies share a similar asset allocation journey until five years before the retirement date. At that point, each strategy takes off on their unique glidepath with their aim of delivering a fluid and gradual descent to your desired outcome, as shown in the table below. Our range of Lifestyle Strategies have been designed to gradually switch from higher to lower risk portfolios as you approach retirement age. For each risk category you can choose a Target Lifestyle Strategy to target either cash, annuity or drawdown at retirement. There are three Target Lifestyle Strategies to choose from, depending on the equity fund you prefer. We explain these below: Target Lifestyle Strategy Your Lifestyle Journey Risk Category At 15 yrs + At 10 yrs At 5 yrs Retirement Cautious Governed Portfolio 1 Governed Portfolio 2 * Governed Portfolio 3 * Target Cash, Target Annuity, Target Drawdown Moderately Cautious Governed Portfolio 4 Governed Portfolio 5 * Governed Portfolio 3 * Target Cash, Target Annuity, Target Drawdown Balanced Governed Portfolio 4 Governed Portfolio 5 * Governed Portfolio 6 * Target Cash, Target Annuity, Target Drawdown Moderately Adventurous Governed Portfolio 7 Governed Portfolio 5 * Governed Portfolio 6 * Target Cash, Target Annuity, Target Drawdown Adventurous Governed Portfolio 7 Governed Portfolio 8 * Governed Portfolio 9 * Target Cash, Target Annuity, Target Drawdown Target Lifestyle Strategy Flexible Lifestyle Strategy This lifestyle strategy invests the equity portion in the RLP Global Managed fund. This is an actively managed global equity fund that’s automatically blended between UK and overseas equities as part of our governance review process. A flexible lifestyle strategy allows you to choose which Governed Portfolios to switch into as you near retirement, rather than using one of our predetermined routes. Target Lifestyle Strategy – Tracker option This tracker version invests the equity portion in the RLP/BlackRock Aquila Global Blend fund. This is a global equity tracker fund that’s automatically blended between UK and overseas equities as part of our governance review process. Target Lifestyle Strategy – Active option This active version invests the equity portion of each portfolio in a specialist fund of funds, the RLP Global Blend Core Plus (Rathbone Global Alpha) fund. This is an actively managed global equity fund that’s automatically blended between UK and overseas equities as part of our governance review process. You can choose to target either cash, annuity or drawdown at retirement. If you choose to invest in either a Governed portfolio or a Governed Lifestyle Strategy, please note that this investment choice must apply to all contributions into your plan. The tables on the next page provide more details about each of the Governed Portfolios and Target Lifestyle Strategies. *The asset allocation of each Governed Portfolio will depend on what the strategy is targeting at retirement. Please refer to the Strategy factsheets available on our website at royallondon.com 15 Governed Portfolios Management Charge1 Management Style Risk Category Time Period Available for Individual Stakeholder2 Available for Group Stakeholder 1.00% Active Cautious Long N Y Governed Portfolio 1 Governed Portfolio 2 1.00% Active Cautious Medium N Y Governed Portfolio 3 1.00% Active Cautious / Moderately Cautious Short N Y Governed Portfolio 4 1.00% Active Moderately Cautious / Balanced Long N Y Governed Portfolio 5 1.00% Active Moderately Cautious / Balanced / Moderately Adventurous Medium N Y Governed Portfolio 6 1.00% Active Balanced / Moderately Adventurous Short N Y Governed Portfolio 7 1.00% Active Moderately Adventurous / Adventurous Long N Y Governed Portfolio 8 1.00% Active Adventurous Medium N Y Governed Portfolio 9 1.00% Active Adventurous Short N Y Within each Governed Portfolio there’s an option to replace the default equity fund, the RLP Global Managed Pension fund. This could result in an additional fund management charge, depending on the fund chosen. Target Lifestyle Strategies Management Charge1 Management Style Risk Category Available for Individual Stakeholder 2 Available for Group Stakeholder Cautious N Y (equity portion) Cautious Lifestyle Strategy 1.00% Active Cautious Tracker Lifestyle Strategy 1.00% Tracker Cautious N Y Cautious Active Lifestyle Strategy – Active Cautious N N Moderately Cautious Lifestyle Strategy 1.00% Active Moderately Cautious N Y Moderately Cautious Tracker Lifestyle Strategy 1.00% Tracker Moderately Cautious N Y Moderately Cautious Active Lifestyle Strategy – Active Moderately Cautious N N Balanced Lifestyle Strategy 1.00% Active Balanced N Y Balanced Tracker Lifestyle Strategy 1.00% Tracker Balanced N Y Balanced Active Lifestyle Strategy – Active Balanced N N Moderately Adventurous Lifestyle Strategy 1.00% Active Moderately Adventurous N Y Moderately Adventurous Tracker Lifestyle Strategy 1.00% Tracker Moderately Adventurous N Y – Active Moderately Adventurous N N Adventurous Lifestyle Strategy Moderately Adventurous Active Lifestyle Strategy 1.00% Active Adventurous N Y Adventurous Tracker Lifestyle Strategy 1.00% Tracker Adventurous N Y – Active Adventurous N N 1.00% Active Balanced Y Y Adventurous Active Lifestyle Strategy Managed Lifestyle Strategy 1 The range of Active Lifestyle Strategies has a variable annual management charge applicable dependent on the time to retirement and proportion invested in each fund. The Active Lifestyle Strategies invest in the RLP Global Blend Core Plus (Rathbone Global Alpha) fund which has a fund management charge of 1.45%. 2 These options might be available for existing Individual Stakeholder Pension Plans. If you have an Individual Stakeholder Pension Plan you should check with our customer service team what investment options are available for you. Please note that for each Target Lifestyle Strategy you have the option to target cash, annuity or drawdown at retirement. For more information about the Target Lifestyle Strategies, including details of the individual funds within each strategy and their fund management charges, please visit royallondon.com/pensioninvestments 16 Governed Retirement Income Portfolios If you’re taking income from your pension you can choose to invest in a Governed Retirement Income Portfolio. The portfolios are designed to suit customers with different risk attitudes and invest in a mix of equities, bonds and property funds managed by Royal London Asset Management (RLAM). There is also the option to replace the default equity fund – the Global Managed Fund – to an alternative equity fund or funds from a selection of fund managers available within our range. Benchmark asset allocations are shown below. Governed Retirement Income Portfolios Governed Retirement Income Portfolio 1 Governed Retirement Income Portfolio 2 Governed Retirement Income Portfolio 3 Governed Retirement Income Portfolio 4 Governed Retirement Income Portfolio 5 10.0% Global Managed 17.0% Global Managed 23.0% Global Managed 35.0% Global Managed 53.5% Global Managed 12.5% Medium (10yr) 20.0% Medium (10yr) 28.5% Medium (10yr) 30.0% Medium (10yr) 65.5% Medium (10yr) 43.5% Medium (10yr) 20.5% Medium (10yr) 25.0% Sterling Extra 25.0% Sterling Extra 8.5% Sterling Extra 14.0% Sterling Extra 20.0% Sterling Extra 10.0% Property 10.0% Property 3.5% Property 5.5% Property 8.0% Property Corporate Bond Index Linked Yield Bonds Corporate Bond Index Linked Yield Bonds Corporate Bond Index Linked Yield Bonds Corporate Bond Yield Bonds 11.5% Medium (10yr) Corporate Bond Yield Bonds RISK Lower Higher You can view the latest asset allocations at royallondon.com/pensioninvestments 17 18 CHOOSING YOUR OWN INVESTMENTS Alternatively, you might prefer to select your own investments. This can be very rewarding, but it takes skill and commitment on your, or your adviser’s, part. Not surprisingly, this option is most suited to people with good investment knowledge who want lots of control over their investments. To help you make this important decision, we’ve listed seven points below that you should consider. If you decide to create an investment portfolio by picking your own funds, it will be up to you, in conjunction with your adviser, to monitor their performance and decide whether you need to change them. You may also need to adjust your portfolio regularly to keep it in line with your changing risk attitude. 1. Make sure you’re paying enough into your pension The amount you will need to pay into your pension will obviously be different for everyone. However, generally the more you pay into a pension plan, the more you can expect to receive when you retire. So you should try to save as much as you can, as early as you can. For detailed information and to work out your personal requirements you should speak to your adviser. In our opinion: People often ask, ‘How much will I get when I retire?’. The truth is that all the choices you make now and at retirement will influence the value of your pension. The amount you get back depends on: how much you pay into your plan, how long your payments are invested, what funds you are invested in, how those funds perform, and also the plan charges. 2. Spread your investments In our opinion: Most financial experts agree that the best way to invest your retirement savings is to have a spread of investment types. So for example you might invest in a mix of property, cash deposits and equities. This way, if one particular investment performs poorly, you wouldn’t be as badly affected. The balance of the different types of investment is called ‘asset allocation’ by the City experts. Getting that balance right can make a huge difference to how your investments perform. Our view is that up to 90 percent of performance stems from asset allocation rather than from just picking a star performing fund. 19 3. Consider the impact of inflation In our opinion: Over time, inflation can erode the purchasing power of your savings. For example, the higher prices of goods rise, the less you can buy with your money over time. If the return on your investment is below the rate of inflation, your investment could lose value in real terms. 4. Choose funds that match your attitude to risk In our opinion: The more risk you’re willing to take with your investments, the higher your potential return – but the greater your chance of loss. Lower risk investments on the other hand offer greater security but lower potential returns. You need to decide how much risk you want to take with your pension savings. If you’re looking for a way of achieving high returns with low risk, you can save yourself a frustrating search: there isn’t one! If you want to chase high returns, you’ll need to accept risk. Some asset classes, such as equities, property and indexlinked gilts, could offer better protection from the effects of inflation over the longer term than others such as cash. A weakness of constructing a portfolio of funds to match your risk profile is that it almost immediately drifts away from your initial allocation. This can expose you to more risk than you may be comfortable with. You’ll also need to review your portfolio regularly and make any changes necessary to maintain your original asset allocation. You can do this by selecting the automatic rebalancing option on your investment. There’s a choice of rebalancing frequencies monthly, quarterly, half yearly and annually and they’re available at no extra cost. 5. Think about how long you have to save In our opinion: How suitable a particular investment is for you depends in part on how long you have until you retire. For example, someone in their twenties will probably want to achieve maximum capital growth so may invest in more aggressive funds. An investor only a few months from retirement will probably want to take far less risk – or no risk at all. Some people may be tempted to make up for lost time as they approach retirement by going for really risky options. It’s your choice. but if you go down this road, make sure you’re prepared for any consequences. 6. Think about any specific requirements you have In our opinion: You might want to invest in a particular geographic area or in small companies rather than multinationals. Whatever your requirements, it’s possible to choose funds that reflect your preferences. You’ll find descriptions of all our funds in Fund Factsheets available on our website at royallondon.com. Reading these will help you make an informed decision. 7. Monitor your investments regularly In our opinion: It isn’t enough to select appropriate funds at the start of your plan. You also need to monitor the performance of your funds regularly to make sure they suit your changing needs. This can help you protect your savings from market falls and take advantage of growth opportunities. With us, you can change your investments free of charge. You might even be able to do it online. But be careful about shifting investments around too often – it’s a marathon, not a sprint. 20 FUND RANGE We have over 160 funds available from a wide range of fund managers. The range of funds and fund managers gives you a choice of different investment styles and exposure to different geographical areas. If you would like to know more about any of the fund managers please visit our website royallondon.com/pensioninvestments The full fund range is listed by asset class on the pages that follow. ASSET MANAGEMENT 21 FUND RANGE Deposit Fund Name Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Deposit 0.00% 0.00% 1.00% Active 0.05 Y N Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Annuity Fund 0.00% 0.00% 1.00% Active N/A Y N RLP Corporate Bond 0.00% 0.00% 1.00% Active 5.04 Y N RLP Ethical Bond 0.00% 0.00% 1.00% Active 5.40 Y N RLP Fixed Interest 0.00% 0.00% 1.00% Active 6.66 Y N RLP Global High Yield Bond 0.00% 0.00% 1.00% Active 4.79 Y N RLP Global Index Linked 0.00% 0.00% 1.00% Active 5.13 Y N RLP Index Linked 0.00% 0.00% 1.00% Active 10.89 Y N RLP International Government Bond 0.00% 0.00% 1.00% Active 2.79 Y N RLP Long (15yr+) Corporate Bond 0.00% 0.00% 1.00% Active 11.48 Y N RLP Long (15yr+) Gilt 0.00% 0.00% 1.00% Active 10.83 Y N RLP Long (15yr+) Index Linked 0.00% 0.00% 1.00% Active 8.13 Y N RLP Medium (10yr) Corporate Bond 0.00% 0.00% 1.00% Active 7.82 Y N RLP Medium (10yr) Gilt 0.00% 0.00% 1.00% Active 6.92 Y N RLP Medium (10yr) Index Linked 0.00% 0.00% 1.00% Active 4.90 Y N RLP Short (5yr) Corporate Bond 0.00% 0.00% 1.00% Active 3.68 Y N RLP Short (5yr) Gilt 0.00% 0.00% 1.00% Active 2.99 Y N RLP Short (5yr) Index Linked 0.00% 0.00% 1.00% Active 2.35 Y N RLP Short Duration Global High Yield 0.00% 0.00% 1.00% Active 1.32 Y N RLP Sterling Extra Yield Bond 0.00% 0.00% 1.00% Active 4.35 Y N RLP UK Government Bond 0.00% 0.00% 1.00% Active 6.78 Y N RLP/Baillie Gifford High Yield Bond 0.30% 0.02% 1.32% Active 5.58 N N RLP/BlackRock Aquila Long Gilt Index 0.00% 0.00% 1.00% Tracker 13.72 Y N RLP/BlackRock Aquila Over 5 years Index linked Gilt Index 0.00% 0.00% 1.00% Tracker 12.93 Y N RLP/BlackRock Aquila UK All Stocks Corporate Bond Index 0.00% 0.00% 1.00% Tracker 6.40 Y N RLP/Fidelity Moneybuilder Income 0.25% 0.19% 1.44% Active 5.73 N N RLP/Fidelity Strategic Bond 0.45% 0.19% 1.64% Active 4.22 N N RLP/Invesco Perpetual Corporate Bond 0.45% 0.16% 1.61% Active 3.75 N N RLP/Invesco Perpetual Global Bond 0.45% 0.17% 1.62% Active 4.88 N N RLP/Invesco Perpetual Monthly Income Plus 0.58% 0.09% 1.67% Active 4.10 N N RLP/Investec Emerging Markets Local Currency Debt 0.70% 0.16% 1.86% Active 14.62 N N RLP/M&G Corporate Bond 0.45% 0.16% 1.61% Active 5.15 N N RLP/M&G Global High Yield Bond 0.58% 0.16% 1.74% Active 5.76 N N RLP/M&G Optimal Income 0.58% 0.16% 1.74% Active 3.75 N N RLP/M&G Strategic Corporate Bond 0.45% 0.16% 1.61% Active 4.64 N N Government and Corporate Bond Fund Name 22 Property Fund Name Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Property 0.00% 0.00% 1.00% Active 2.30 Y N RLP/Schroder Global Real Estate Securities 0.70% 0.18% 1.88% Active 13.63 N N Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 Mixed Asset Fund Name Royal London With Profits 0.00% N/A N/A Active N/A Y N RLP Adventurous Managed 0.00% 0.00% 1.00% Active 6.88 Y N RLP Defensive Managed 0.00% 0.00% 1.00% Active 3.87 Y N RLP Managed 0.00% 0.00% 1.00% Active 6.01 Y N RLP Sustainable Diversified Trust 0.45% 0.02% 1.47% Active N/A N N RLP/7IM AAP Adventurous 0.45% 0.13% 1.58% Active 10.44 N N RLP/7IM AAP Balanced 0.45% 0.10% 1.55% Active 7.57 N N RLP/7IM AAP Moderately Adventurous 0.45% 0.10% 1.55% Active 9.18 N N RLP/7IM AAP Moderately Cautious 0.45% 0.14% 1.59% Active 5.10 N N RLP/BlackRock Aquila Consensus 0.00% 0.00% 1.00% Tracker 9.20 Y N RLP/BMF Balanced 0.45% 0.89% 2.34% Active 7.61 N N RLP/BMF Cautious Growth 0.45% 0.77% 2.22% Active 5.71 N N RLP/BMF Defensive Income 0.45% 0.85% 2.30% Active 4.40 N N RLP/Invesco Perpetual Distribution 0.64% 0.13% 1.77% Active 5.12 N N RLP/Investec Cautious Managed 0.58% 0.09% 1.67% Active 6.44 N N RLP/Jupiter Merlin Balanced Portfolio 0.70% 0.88% 2.58% Active 8.29 N N RLP/Jupiter Merlin Growth Portfolio 0.70% 0.94% 2.64% Active 9.44 N N RLP/Jupiter Merlin Income Portfolio 0.70% 0.77% 2.47% Active 6.36 N N RLP/Man GLG Balanced Managed 0.45% 0.15% 1.60% Active 7.71 N N RLP/Man GLG Stockmarket Managed 0.45% 0.15% 1.60% Active 8.80 N N RLP/Neptune Balanced 0.70% 0.09% 1.79% Active 9.68 N N RLP/Neptune Global Alpha 0.95% 0.11% 2.06% Active 14.47 N N RLP/Newton Mutli-Asset Balanced 0.45% 0.11% 1.56% Active 7.63 N N RLP/Newton Multi-Asset Growth 0.45% 0.12% 1.57% Active 9.39 N N RLP/Rathbone Enhanced Growth 0.45% 0.87% 2.32% Active 9.49 N N RLP/Rathbone Strategic Growth 0.45% 0.84% 2.29% Active 5.59 N N RLP/Rathbone Total Return 0.45% 0.69% 2.14% Active 2.87 N N RLP/Schroder Managed Balanced 0.35% 0.10% 1.45% Active 7.55 N N RLP/Schroder MM Diversity 0.35% 0.77% 2.12% Active 3.54 N N RLP/Schroder MM Diversity Balanced 0.35% 0.81% 2.16% Active 5.90 N N RLP/Schroder MM Diversity Tactical 0.35% 0.83% 2.18% Active 5.72 N N RLP/UBS Global Allocation 0.40% 0.07% 1.47% Active 8.17 N N 23 UK Equity Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Equity Income 0.00% 0.00% 1.00% Active 8.80 Y Y RLP UK Equity 0.00% 0.00% 1.00% Active 8.90 Y Y RLP UK Ethical 0.00% 0.00% 1.00% Active 9.48 Y Y RLP UK Mid Cap 0.00% 0.00% 1.00% Active 11.90 Y Y RLP UK Smaller Companies 0.00% 0.00% 1.00% Active 11.34 Y Y RLP UK Opportunities 0.00% 0.00% 1.00% Active 9.96 Y Y RLP/Baillie Gifford UK Equity 0.50% 0.00% 1.50% Active 10.82 N Y RLP/BlackRock Aquila UK Equity Index 6 0.00% 0.00% 1.00% Tracker 10.33 Y Y RLP/BlackRock UK Equity 0.35% 0.02% 1.37% Active 9.46 N Y RLP/Dimensional UK Core Equity 0.12% 0.08% 1.20% Tracker N/A N Y RLP/Fidelity UK Growth 0.95% 0.20% 2.15% Active 10.23 N Y RLP/Invesco Perpetual High Income 0.70% 0.17% 1.87% Active 8.16 N Y RLP/Investec UK Special Situations 0.70% 0.10% 1.80% Active 9.72 N Y RLP/M&G Recovery 0.70% 0.16% 1.86% Active 11.30 N Y RLP/Schroder Income Maximiser 0.70% 0.16% 1.86% Active 9.47 N Y RLP/Schroder MM UK Growth 0.35% 0.97% 2.32% Active 9.98 N Y RLP UK Equity Core Plus (Close Teams UK Equities (1%)) 6 0.35% 0.03% 1.38% Active 11.66 N Y RLP UK Equity Core Plus (Close Teams UK Equities (2%)) 6 0.60% 0.05% 1.65% Active 12.24 N Y RLP UK Equity Core Plus (Schroder Core UK Equity) 6+7 0.70% 0.18% 1.88% Active 10.58 N Y RLP UK Equity Core Plus (Schroder UK Equity) 6 0.70% 0.17% 1.87% Active 9.56 N Y RLP UK Equity Specialist (Artemis UK Special Situations) 6 0.70% 0.06% 1.76% Active 9.08 N Y RLP UK Equity Specialist (Invesco Perpetual UK Growth) 6 0.60% 0.16% 1.76% Active 11.04 N Y RLP UK Equity Specialist (Schroder UK Alpha Plus) 6 0.70% 0.16% 1.86% Active 9.72 N Y RLP UK Income Core Plus (Artemis Income) 6 0.70% 0.04% 1.74% Active 8.64 N Y RLP UK Income Specialist (Fidelity Moneybuilder Dividend) 6+12 0.30% 0.17% 1.47% Active 8.17 N Y RLP UK Mid Cap Specialist (Franklin UK Mid Cap) 6+10 0.70% 0.07% 1.77% Active 12.98 N Y RLP UK Small Cap Specialist (Investec UK Smaller Companies) 5 0.70% 0.09% 1.79% Active 13.11 N Y Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP American 0.00% 0.00% 1.00% Tracker 11.95 Y Y RLP/BlackRock Aquila US Equity Index 6 0.00% 0.00% 1.00% Tracker 12.26 N Y RLP/Legg Mason IF Royce US Smaller Companies 0.70% 0.24% 1.94% Active 14.81 N Y RLP/Neptune US Opportunities 0.70% 0.07% 1.77% Active 13.91 N Y RLP/Schroder US Mid Cap 0.70% 0.16% 1.86% Active 11.11 N Y 0.95% 0.20% 2.15% Active 11.87 N Y 0.70% 0.18% 1.88% Active 12.85 N Y Fund Name US Equity Fund Name RLP US Core Plus (Fidelity American) 6+10 RLP US Specialist ( JPMorgan US) 24 6 European Equity Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP European 0.00% 0.00% 1.00% Active 11.45 Y Y RLP/BlackRock Aquila European Equity Index 6 0.00% 0.00% 1.00% Tracker 13.43 N Y RLP/Jupiter European Special Situations 0.70% 0.28% 1.98% Active 10.76 N Y RLP/Schroder European Opportunities 0.70% 0.17% 1.87% Active 11.47 N Y RLP Europe Core Plus (Fidelity European Blended) 6 0.95% 0.21% 2.16% Active 11.00 N Y RLP Europe Specialist (Neptune European Opportunities) 9 0.70% 0.10% 1.80% Active 17.24 N Y Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Far East (ex Japan) 0.00% 0.00% 1.00% Tracker 14.09 Y Y RLP Japan 0.00% 0.00% 1.00% Tracker 12.87 Y Y RLP Pacific 0.00% 0.00% 1.00% Tracker 12.35 Y Y RLP/BlackRock Aquila Japanese Equity Index 0.00% 0.00% 1.00% Tracker 13.45 N Y RLP/BlackRock Aquila Pacific Rim Equity Index 0.00% 0.00% 1.00% Tracker 15.70 N Y RLP/Fidelity South East Asia 0.95% 0.22% 2.17% Active 14.68 N Y RLP Asia Pacific Core Plus (Stewart Investors Asia Pacific Leaders) 0.80% 0.05% 1.85% Active 12.55 N Y RLP Asia Pacific Core Plus (Invesco Perpetual Asian) 6 0.70% 0.20% 1.90% Active 15.95 N Y RLP Japan Core Plus (Schroder Tokyo) 6 0.70% 0.16% 1.86% Active 12.80 N Y RLP Japan Specialist (Invesco Perpetual Japan) 6+8 0.70% 0.18% 1.88% Active 12.77 N Y Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Global Equity 0.00% 0.00% 1.00% Active 9.27 Y Y RLP Global Managed 0.00% 0.00% 1.00% Active 9.05 Y Y RLP Worldwide 0.00% 0.00% 1.00% Active 10.26 Y Y RLP/Baillie Gifford Worldwide Equity (50:50) 0.50% 0.01% 1.51% Active 10.33 N Y RLP/BlackRock Aquila Global Blend 5 0.00% 0.00% 1.00% Tracker 10.46 Y Y RLP/BlackRock Aquila Global Equity Index (50:50) 0.00% 0.00% 1.00% Tracker 10.78 Y Y RLP/BlackRock Aquila Global Equity Index (60:40) 6 0.00% 0.00% 1.00% Tracker 10.87 Y Y RLP/BlackRock Aquila World (ex UK) Equity Index 0.00% 0.00% 1.00% Tracker 11.64 Y Y RLP/Dimensional Global Core Equity 0.25% 0.08% 1.33% Tracker N/A N Y RLP/Dimensional Global Targeted Value 0.45% 0.08% 1.53% Tracker N/A N Y RLP/Fidelity Special Situations Blended 0.95% 0.19% 2.14% Active 10.08 N Y RLP/First State Global Listed Infrastructure 0.70% 0.08% 1.78% Active 11.91 N Y RLP/HSBC Amanah Global Equity Index 0.00% 0.25% 1.25% Tracker 12.07 N Y RLP/Jupiter Ecology 0.70% 0.03% 1.73% Active 10.62 N Y RLP/Jupiter Merlin Worldwide Portfolio 0.70% 1.05% 2.75% Active 10.63 N N RLP/M&G Global Basics 0.70% 0.18% 1.88% Active 11.81 N Y Fund Name Asian Equity Fund Name Global Equity Fund Name 25 Global Equity continued Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP/M&G Global Dividend 0.70% 0.17% 1.87% Active 12.40 N Y RLP/M&G Global Leaders 0.70% 0.17% 1.87% Active 12.12 N Y RLP/Neptune Global Equity 0.70% 0.09% 1.79% Active 12.84 N Y RLP/Newton Global Income 0.70% 0.11% 1.81% Active 10.27 N Y RLP/Sarasin Food & Agriculture Opportunities 0.70% 0.24% 1.94% Active 10.15 N Y RLP/Schroder MM International 0.35% 0.93% 2.28% Active 9.32 N Y RLP/UBS Global Blend (50:50) 0.60% 0.24% 1.84% Active 10.94 N Y RLP Global Blend Core Plus (Rathbone Global Alpha) 6 0.45% 0.79% 2.24% Active 9.62 N Y RLP Global Managed Equity Specialist (Invesco Perpetual Global Equity) 6 0.60% 0.17% 1.77% Active 11.91 N Y RLP Global Managed Equity Specialist (Investec Global Strategic Equity) 0.70% 0.12% 1.82% Active 11.32 N Y Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP/BlackRock Emerging Markets Tracker 0.15% 0.06% 1.21% Tracker 16.46 N Y RLP/Columbia Threadneedle Latin America 0.70% 0.20% 1.90% Active 25.36 N Y RLP/Dimensional Emerging Markets Core Equity 0.50% 0.14% 1.64% Tracker N/A N Y RLP/Fidelity Emerging Europe, Middle East and Africa 0.95% 0.38% 2.33% Active 15.58 N Y RLP/Henderson China Opportunities 0.70% 0.23% 1.93% Active 17.79 N Y RLP/JPMorgan Emerging Europe Equity 0.70% 0.18% 1.88% Active 18.49 N Y RLP/Jupiter India 0.70% 0.34% 2.04% Active 22.28 N Y RLP Emerging Markets Core Plus ( JPM Emerging Markets) 6+11 0.70% 0.18% 1.88% Active 16.07 N Y Additional Fund Management Charge1 Investment Expenses2 Total Expense Ratio3 Fund Management Style Fund Volatility4 Available for Stakeholder Can be used within Governed Portfolios5 RLP Absolute Return Government Bond 0.00% 0.00% 1.00% Active N/A Y N RLP Cash Plus 0.00% 0.00% 1.00% Active 0.20 Y N RLP Commodity 0.00% 0.00% 1.00% Tracker N/A Y N RLP Enhanced Cash Plus 0.00% 0.00% 1.00% Active N/A Y N RLP/BlackRock Gold and General 5 0.83% 0.17% 2.00% Active 38.34 N Y RLP/Columbia Threadneedle Absolute Return Bond 0.58% 0.16% 1.74% Active 4.75 N N RLP/Investec Global Energy Fund Name Emerging Market Equity Fund Name Specialist Fund Name 0.70% 0.14% 1.84% Active 22.43 N Y RLP/JPMorgan Cautious Managed 0.58% 0.18% 1.76% Active 4.46 N N RLP/JPMorgan Natural Resources 5 0.70% 0.18% 1.88% Active 25.97 N Y RLP/Jupiter Financial Opportunities 5 0.70% 0.24% 1.94% Active 10.89 N Y RLP/Newton Real Return 0.70% 0.11% 1.81% Active 5.45 N N RLP/Standard Life Global Absolute Return Strategies 0.70% 0.08% 1.78% Active 4.43 N Y 26 5 These charges are added to the annual management charge for your plan. The expenses shown are the typical costs incurred by the investment management company, which are deducted from the value of the fund. The level of these expenses is not in Royal London’s control and may vary from year to year. 3 Total Expense Ratio (TER), covering calendar year 2016. The TER is a measure of the overall cost of a fund to the investor. It includes the Fund Management Charge plus any audit, custodian, registration or compliance fees paid out of the fund’s assets. It does not include the costs of buying and selling securities, which would still be paid if investing directly in securities instead of through an investment fund. 4 Source: Lipper. The Fund Volatility figure shown is the annualised standard deviation of the monthly returns on the fund over a 3 year time period to 31.03.2017. Standard deviation is a measure of the spread of monthly returns around the average (mean) return. A higher volatility figure indicates that the fund has produced a wider range of returns over the three year period while ab fund with a lower volatility figure has been more stable. 5 Matrix funds underlying fund, to a suitable alternative fund meaning that you continue to be invested as initially expected. Any change to a Matrix fund would be communicated to you in advance giving you, and your adviser, time to review your options. 1 2 Our Matrix funds are a range of equity funds which come with extra governance to ensure they continue to behave as you first expected. With clear risk categories and equity sectors each fund is monitored by our Investment Advisory Committee to ensure it does not veer from these set criteria. Under some circumstances this governance process may lead to a change of the Sector Core (<1%)* The indicated funds can be used to replace the default equity content, RLP Global Managed Pension fund, of our Governed Portfolio options. Further details or our Governed Portfolio options can be found on pages 14 and 15 of this guide. 6 The indicated funds are part of our Matrix fund offering and come with an extra layer of governance. Further details on these Matrix funds can be found on the following page. 7 Please note the underlying investment of this fund changed on 7 May 2010. 8 Please note the underlying investment of this fund changed on 19 October 2009. 9 Please note the underlying investment of this fund changed on 3 May 2011. 10 Please note the underlying investment of this fund changed on 28 November 2011. 11 Please note the underlying investment of this fund changed on 14 December 2012. Please note the underlying investment of this fund changed on 26 May 2014. 12 The following table shows the funds that currently populate the Matrix, within their risk category and equity sector. Core Plus (1–5%) * Close TEAMS UK Equities (1%), UK Equity BlackRock Aquila UK Equity Index Close TEAMS UK Equities (2%), Schroder Core UK Equity Schroder UK Equity UK Income Artemis Income UK Mid Cap Global Managed Equity Europe US Japan Asia Pacific Emerging Markets Artemis UK Special Situations, Invesco Perpetual UK Growth, Schroder UK Alpha Plus Fidelity MoneyBuilder Dividend Franklin UK Mid Cap UK Small Cap Global Blend Specialist (>5%) * Investec UK Smaller Companies BlackRock Aquila Global Blend Rathbone Global Alpha Invesco Perpetual Global Equity, BlackRock Aquila Global Equity Index (60:40) Investec Global Free Enterprise BlackRock Aquila European Equity Index Fidelity European Blended Neptune European Opportunities BlackRock Aquila US Equity Index Fidelity American JP Morgan US Schroder Tokyo Invesco Perpetual Japan Invesco Perpetual Asian, Stewart Investors Asia Pacific Leaders JPM Emerging Markets Stewart Investors Global Emerging Markets Leaders - closed to new business * Our three categories of risk are Core, Core Plus and Specialist and we have used a measure called “tracking error” to determine these categories. “Tracking error” is a figure that tells us how close the performance of the fund is to its benchmark. In general terms the greater the tracking error the more risk the fund manager is taking. Consequently the greater the potential risk and reward for investors in these funds. For the purposes of the Matrix, the “tracking error” is an annualised measurement over rolling 36-month periods and this is updated every month. Further details on the governance and the review process surrounding the Matrix funds can be found in our Matrix Consumer Guide. 27 The next step We hope you’ve found this guide useful. If after reading it you’re still unsure of what to do, speak to a financial adviser who’ll be able to help you select an investment that’s suitable for you. Advisers may charge for providing such advice and should confirm any costs beforehand. Royal London 1 Thistle Street, Edinburgh EH2 1DG royallondon.com All literature about products that carry the Royal London brand is available in large print format on request to the Marketing Department at Royal London, 1 Thistle Street, Edinburgh EH2 1DG. All of our printed products are produced on stock which is from FSC® certified forests. 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. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. 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. April 2017 5G15/34