The evolution of the Governed Portfolios

1 July 2016
We’re making some exciting changes to the strategic asset allocation of our Governed Portfolios including the addition of some new asset classes. The aim of this is to increase diversification and make the portfolios more resilient to shocks.
Straight talking

Listen to Trevor Greetham, Head of multi asset, talk about these changes in a recently recorded webinar.

Evolution is the driver behind these changes. A broader mix means the Governed Portfolios are less exposed to negative developments in individual asset classes, more resilient to market shocks and can benefit further from Royal London Asset Management’s (RLAM) increased multi asset capability.  There is no change to risk framework or the current cost structure.  

Further diversification

We are increasing the number of asset classes used in the strategic asset allocation of the Governed Portfolios from four to eight. In addition to equities, property, index-linked and corporate bonds, we’ll also utilise commodities, high yield bonds, gilts and absolute return strategies including cash.

What’s more, we’ll continue to apply a tactical overlay to the portfolios which is managed by Trevor Greetham, Head of multi asset at RLAM, with the aim of adding value over and above the strategic asset allocation by making short-term tweaks to the investment mix. 

The new asset classes

  • Commodities –provide additional diversification and some resilience to unexpected inflation shocks.
  • Broader fixed interest exposure –we are adopting an equal weighting across high yield, gilts, index linked and corporate bonds to provide stronger diversification and some additional resilience during stress periods.
  • Absolute Return (including cash) – this further reduces our exposure to index linked and provides enhanced capital preservation and liquidity characteristics.

Equity benchmark change

As well as the additional asset classes, we’re also making a change to the strategic benchmark of the equity component within the Governed Portfolios. The RLP Global Managed fund is currently split 55% UK equities, 45% overseas equities. We’re changing this mix to a 50/50 split to allow for greater exposure to overseas.

This change also applies to the RLP Blackrock Aquila Global Blend fund and RLP Core Alpha Plus (Rathbone Global Alpha) fund; equity funds used in our Tracker and Active versions of the Target Lifestyle Strategies respectively.

When are the changes taking place?

The new strategic asset allocations will be in place by early July. Tactical asset allocations will be shown on the relevant factsheet as and when the changes ae made.

Further information

Listen to Trevor Greetham talk through the above changes in a recently recorded webinar

Alternatively, speak to your usual Royal London contact about the changes.

About the author

Ryan Medlock

Investment Proposition Manager

Ryan’s remit includes speaking investment matters at adviser events, regularly contributing to Royal London websites and trying to beat his colleagues in the fantasy fund manager competition.

Last updated: 01 Jul 2016

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