Active investment management

The Royal London Asset Management (RLAM) Multi Asset team headed up by Trevor Greetham - apply a tactical overlay to each portfolio within the Governed Range. This is a robust and repeatable monthly asset allocation process which takes shorter term market movements into account.

Our experts constantly monitor the economy to exploit these market movements and steer the Governed Range towards stronger growth by tactically adjusting the asset allocation of each portfolio, within a risk-controlled framework. This is supported by additional oversight from the Investment Advisory Committee (IAC).

If our experts decide that the mix of assets needs to be adjusted, we’ll do this automatically on your behalf – you don’t need to do anything.

View details of the latest tactical change.

Systematic framework for tactical decision – making

The Multi Asset team focus on tactical asset allocation as a key driver of returns – a central part of this is the investment clock.

Asset class rotation and the economic cycle

The thick teal line in the business cycle shown below shows growth – a boom/bust cycle which on average lasts 5 years. The purple dashed line is inflation. Inflation rises for a while after growth surges, then takes a while before it drops again.

Since growth and inflation are two different cycles this creates four different stages of the business cycle.

Investments will perform differently as we move throughout the cycle, which can present opportunities for tactical decision-making. For example:

• Bonds do well in the reflation phase where both growth and inflation is falling.
• Stocks do best in the recovery phase where growth is strong, and inflation is still falling.
• Commodities tend to do best in the overheat phase where there's strong growth and rising inflation.
• Cash performs best in the stagflation phase where growth starts falling again, but inflation remains high.

The investment clock

The investment clock relates the global business cycle to the performance of various investments.

This helps us easily identify which stage of the business cycle we’re in and where the economy is heading in terms of global growth and global inflation. So you can have confidence that we’re taking steps to invest your clients’ money in the right asset classes, at the right time.