Investment Governance Meeting Summary – 13 June 2017

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Strategic asset allocation

  • New SAA positions for the GRIPs were recommended this quarter.
  • The proposed GRIPs aim to be more efficient and will remove portfolio concentration by spreading risk across a greater range of asset classes to provide diversification benefits.
  • Further details of the proposed risk metrics were requested by the IAC.

Tactical asset allocation

  • There have been three tactical asset allocation changes since the last IAC meeting in February. The most recent change took place on 11 May 2017.
  • Within the Governed Portfolios, we maintained the small overweight in equities and used this change to add positions in global high yield while slightly trimming the commodity exposure.
  • Within the GRIPs, we reduced our overweight position in equities and increased exposure to global high yields and gilts.
  • The last change was based on global growth starting to peak and volatility lurking on the horizon.

Fund review

  • 9 funds under review
  • 61 funds on watch

Governed Portfolios

Number of Governed Portfolios outperforming benchmark 1 year 3/9
3 years 5/9
Since launch 7/9
Number of Governed Portfolios within target volatility ranges 9/9
  • Absolute performance for the Governed Portfolios remains strong over 12 months.
  • GP3, GP6 and GP9 are outperforming their benchmark over 1 year.
  • GP4 and GP7 continue to underperform since launch
  • RLP Global Managed continues to underperform and this is the primary performance detractor for the Governed Portfolios.
  • All nine Governed Portfolios remain within their projected target volatility ranges.  

Governed Retirement Income Portfolios

Number of GRIPs outperforming benchmark 1 year 5/5
3 years 5/5
Since launch 5/5
Number of GRIPs within short-term risk measure 4/5
Number of GRIPS within long-term risk measure 0/5
  • All GRIPs are outperforming their benchmarks over 1 year, 3 years and since launch.
  • The GRIPs are benefiting from the outperformance provided by the RLP Sterling Extra Yield Bond fund, offsetting the underperformance of RLP Global Managed.
  • Similarly to previous quarters, the long term measure for all GRIPs is triggering red, suggesting that the portfolios are not taking enough risk.
  • The review of the GRIP SAAs continues with the proposal presented to the IAC this quarter.


High Yield      
Index Linked    
Corporate Bonds    
Absolute Return Strategies
(including cash)
  • TAA effects contributed positively over Q1 as performance continued to benefit from overweighting outperforming equities funded out of Fixed Income. UK Property, Commodities, and Cash & Absolute Return allocations were all maintained at or around benchmark levels during the period.
  • Regional positioning within equities detracted over Q1 with the overweight stance in Japan the largest factor. However, there was a positive contribution from the UK equity line up following the relative performance of small and midcaps stocks versus large caps returned to positive territory following last year’s Brexit-related underperformance.
  • Within Fixed income, the preference for corporate bonds over government debt continued to provide a boost to relative returns as credit spreads narrowed further over the period. This offset a negative effect from underweighting index-linked Gilts, which are now discounting UK structural inflation well above 3% over the medium and long term.


The following funds will be subject to action prior to the next IAC meeting:

  • RLP UK Equity Core Plus (Schroder Core UK Equity)
  • RLP US Specialist (JPM US)

The following funds are under review:

  • RLP Core Plus (Fidelity European Blended)
  • RLP Global Blend Core Plus (Rathbone Global Alpha)
  • RLP Specialist (Investec UK Smaller Companies)
  • RLP UK Equity Core Plus (Close TEAMS UK Equities 2%)
  • RLP UK Mid Cap Specialist ( Franklin UK Mid Cap)
  • RLP/Blackrock Aquila Global Equity Index (60:40)

The following funds will be replaced:

  • RLP US Core Plus (Fidelity American)
  • RLP Europe Specialist (Neptune European Opportunities)

There are currently 61 funds on watch. This consists of:

  • 46 externally managed funds
  • 15 Royal London managed funds
Last updated: 28 Jun 2017

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