Download Governed Portfolio 8 - Royal London for advisers

This is for financial adviser use only and shouldn’t be relied upon by any other person.
GOVERNED PORTFOLIO 8
ANNUAL REVIEW
Introduction
This document provides a rolling annual review of Governed Portfolio 8 and 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 the Governed Portfolios please visit
advisers.royallondon.com/investment.
Investment objective
This portfolio aims to deliver above inflation growth in the value of the fund at retirement, whilst taking a level of risk
consistent with an adventurous risk attitude over a medium time period.
Ongoing governance
Governed Portfolio 8 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 and investment timeframe of the portfolio. If the IAC decide that the mix of assets need adjusted it
happens automatically on your clients behalf.
Current tactical allocation






77.50%
14.42%
6.00%
0.50%
0.50%
1.08%
Benchmark asset allocation
RLP Global Managed
RLP Property
RLP Commodity
RLP Medium (10yr) Gilt
RLP Medium (10yr) Index Linked
RLP Medium (10yr) Corporate Bond







70.00%
15.00%
5.00%
1.66%
1.67%
1.67%
5.00%
Equity
Property
Commodities
Gilts (10yr)
Index linked Bonds (10yr)
Corporate bonds (10yr)
Absolute Return Strategies (including cash)
Tactical position as at 19/01/2017.
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

Performance as at 31/12/16
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 Change

Compound Annual
31/12/2015
31/12/2014
31/12/2013
31/12/2012
31/12/2011
31/12/2016
31/12/2015
31/12/2014
31/12/2013
31/12/2012
%Chg
%Chg
%Chg
%Chg
%Chg
3 Years
5 Years
Governed Portfolio 8
15.28
3.64
7.43
17.54
9.23
8.67
10.49
Composite benchmark
16.74
2.34
7.31
15.28
9.18
8.62
10.03
Difference
-1.46
1.30
0.12
2.26
0.05
0.05
0.46
Portfolio Name
Growth Rate (%)
Source: Lipper, bid to bid, as at 31.12.2016, Royal London, as at 31.12.2016. All performance figures, including the figures shown
for the growth in the benchmark, have been calculated net of a 1% annual management charge applicable to the Governed
Portfolio. Please note that the Governed Portfolios and their benchmarks are rebalanced on a monthly basis.
This is for financial adviser use only and shouldn’t be relied upon by any other person.
Performance as at 28/02/17
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 Change
Compound Annual
29/02/2016
28/02/2015
28/02/2014
28/02/2013
29/02/2012
28/02/2017
29/02/2016
28/02/2015
28/02/2014
28/02/2013
%Chg
%Chg
%Chg
%Chg
%Chg
3 Years
5 Years
Governed Portfolio 8
20.05
-2.10
10.57
10.82
10.19
9.12
9.67
Composite benchmark
21.24
-2.73
10.58
8.53
11.23
9.24
9.49
Difference
-1.19
0.63
-0.01
2.29
-1.04
-0.12
0.18
Portfolio Name
Growth Rate (%)
Source: Lipper, bid to bid, as at 28.02.2017, Royal London, as at 28.02.2017. All performance figures, including the figures shown
for the growth in the benchmark, have been calculated net of a 1% annual management charge applicable to the Governed
Portfolio. Please note that the Governed Portfolios and their benchmarks are rebalanced on a monthly basis.
Portfolio volatility
Governed Portfolio 8 targets a specific level of volatility which is shown on the table below.
Governed Portfolio 8
Estimated (%)
11.9
Target (%)
12.5
Volatility
Upper bound (%)
13.8
Lower bound (%)
11.3
Source: Investment Advisory Committee Report, data as at 31.12.2016. The volatility shown is the forward looking stochastic
projection of the annualised volatility of the strategic asset allocation over a 10 year time period.
Governed Portfolios have a fixed risk target with a 10% tolerance either side, i.e. we will always aim to keep the volatility
of the strategic asset allocation for Governed Portfolio 8 between 11.3% and 13.8% p.a. A higher portfolio volatility figure
indicates we would expect the portfolio to produce a wider range of returns than the target volatility figure while a lower
portfolio volatility figure indicates we would expect returns to be more stable than the target volatility figure.
Annual review log
Date
Details
IAC Meeting –
28/02/2017
Governed Portfolio 8 underperformed benchmark over 1 year and outperformed benchmark over 3 and 5 years
to end of December 2016. The existing tactical position applied 19/01/2017 continues. No change required to
benchmark asset allocation.
We have further increased our exposure to equities where we favour Japan and remain underweight US and
Europe. Commodities should benefit from an improvement in Chinese growth and US dollar strength and we
have now taken an overweight position. We have further reduced our holdings in medium dated gilts, cash and
medium dated corporate bonds and have slightly reduced our allocation to Property.
We have reduced the exposure to equities (-1.25%) and increased the exposure to absolute return strategies
(including cash) (0.25%) and 10 year government bonds (1.00%).
Overall the asset allocation remains overweight in equity and underweight index-linked bonds, corporate
bonds, government bonds and absolute return strategies (including cash). The allocation is neutral
commodities, property.
Governed Portfolio 8 underperformed benchmark over 1 year and outperformed benchmark over 3 and 5 years
to end of September 2016. The existing tactical position applied 01/12/2016 continues. No change required to
benchmark asset allocation.
We have reduced the exposure to 10 year corporate bonds (-0.25%) and increased the exposure to absolute
return strategies (including cash) (0.25%).
Overall the asset allocation is now overweight in equity and underweight index-linked bonds, corporate bonds,
government bonds and absolute return strategies (including cash). The allocation is neutral, commodities,
property.
We have reduced the exposure to absolute return strategies (including cash) (-1.50%) and increased the
exposure to equities (1.25%) and commodities (0.25%).
Overall the asset allocation is now overweight in equity and underweight index-linked bonds, government
bonds and absolute return strategies (including cash). The allocation is neutral corporate bonds, commodities,
property and high yield bonds.
We have reduced the exposure to 5 year index-linked bonds (-0.25%) and 10 year index-linked bonds (-0.75%)
and increased the exposure to 10 year corporate bonds (0.75%) and absolute return strategies (including cash)
(0.25%).
Overall the asset allocation is now overweight in equity and underweight in commodities, government bonds,
index-linked bonds and absolute return strategies (including cash). The allocation is neutral property,
corporate bonds and high yield bonds.
19/01/2017
01/12/2016
IAC Meeting –
01/12/2016
10/11/2016
13/10/2016
15/09/2016
This is for financial adviser use only and shouldn’t be relied upon by any other person.
IAC Meeting –
30/08/2016
11/08/2016
14/07/2016
30/06/2016
30/06/2016
16/06/2016
IAC Meeting 14/06/2016
02/06/2016
21/04/2016
Governed Portfolio 8 underperformed benchmark over 1, 3 and 5 years to end of June 2016. The existing
tactical position applied 11/08/2016 continues. No change required to benchmark asset allocation.
We have reduced the exposure to 10 year index-linked bonds (-0.50%) and 5 year index-linked bonds (-1.00%)
and increased the exposure to equities (0.75%) and commodities (0.75%).
Overall the asset allocation is now overweight in equity and corporate bonds and underweight in commodities,
government bonds, index-linked bonds and absolute return strategies (including cash). The allocation is
neutral property.
We have reduced the exposure to equities (-1.25%) and increased the exposure to 5 year index-linked bonds
(1.25%).
Overall the asset allocation is now overweight in equity and index-linked bonds and underweight in
commodities, corporate bonds, government bonds and absolute return strategies (including cash). The
allocation is neutral property.
We have changed the strategic asset allocation of the Governed Portfolios. We’ve introduced the following new
asset types; absolute return strategies including cash, commodities, high yield bonds and gilts.
We have reduced the exposure to equities (-0.67%), 10 year index-linked bonds (-1.61%), 5 year index-linked
bonds (-0.50%) and absolute return strategies (including cash) (-1.90%) and increased the exposure to 10 year
government bonds (0.25%) and 10 year corporate bonds (0.43%). We have also introduced a new allocation to
commodities (4.00%).
Overall the asset allocation is now overweight in equity and index-linked bonds and underweight absolute
return strategies (including cash), commodities, corporate bonds and government bonds. The allocation is
neutral property.
We have reduced the exposure to absolute return strategies (including cash) (-1.36%) and removed the
exposure to global high yield bonds (-0.35%) and increased exposure to equity (1.50%) and 10 year corporate
bonds (0.21%).
Overall the asset allocation is now overweight in equity, absolute return strategies (including cash), government
bonds and high yield bonds and underweight in corporate bonds and index-linked bonds.
Governed Portfolio 8 outperformed benchmark over 3 and 5 years to end of March 2016. The existing tactical
position applied 02/06/2016 continues. No change required to benchmark asset allocation.
We have reduced the exposure to equity (-1.00%), 10 year corporate bonds (-0.07%), 10 year index-linked
bonds (-0.11%) and global high yield bonds (-0.35%) and increased exposure to absolute return strategies
(including cash) (0.78%), 10 year government bonds (0.25%) and 5 year index-linked bonds (0.50%).
Overall the asset allocation is now overweight in equity, absolute return strategies (including cash), government
bonds and high yield bonds and underweight in corporate bonds and index-linked bonds.
We have reduced the exposure to equity (-1.50%), 15 year corporate bonds (-1.84%) and 15 year index-linked
bonds (-0.41%) and increased exposure to absolute return strategies (including cash) (2.41%), and 15 year
government bonds (1.05%). We have also introduced a new holding in our Global High Yield Bond fund
(0.29%).
Overall the asset allocation is now overweight in equity, government bonds, absolute return strategies
(including cash) and high yield bonds and underweight in corporate bonds and index-linked bonds.
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0RL.
March 2017
5Z0269/32