Investment governance

Our governance promise ensures we take a proactive role in the governance of our investment proposition.
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We believe all investment options should be monitored on a regular basis and through strong governance we can help to ensure they deliver in line with their investment objectives.

That’s why all of our investment options have a formal review process, at no extra cost.

At the heart of this is our Investment Advisory Committee (IAC).

Find out more about our Governance Promise.

View a copy of the Investment Advisory Committee Terms of reference

About the IAC

The IAC is made up of five pension and investment experts, three from the Royal London Group and two independent experts:

  • Vidur Bahree, Group Investment Director, Royal London Group
  • Piers Hillier, Chief Investment Officer, Royal London Asset Management
  • Ewan Smith, Director, CEO Office
  • Candia Kingston, Independent Chairperson
  • JB Beckett – Independent Representative

They're committed to providing an ongoing formal review process for our investment proposition helping you deliver an ongoing, compliant service and peace of mind to your clients.

Meetings are held on a regular, usually quarterly basis to review our Governed Range and funds. The review process focuses on taking a long-term view to ensure investment decisions are made in our investor’s best interests and cover the following types of questions:

  • What is the best blend of assets to meet our customers’ objectives?
  • How should we change the asset mix to respond to changes in the economic outlook?
  • The long-term fundamentals for an asset class have changed, should the best asset mix change?
  • There has been a change of fund manager, would it be best to switch funds?
  • Should the amount invested in UK and overseas equities be changed?

We understand that real governance needs to be transparent so you can see what action we’ve taken and why.

To help the committee to make these decisions, they review reports and market commentary from –

  • Morningstar Investment Management Europe Limited – fund reports
  • Moody’s Analytics – comprehensive risk report
  • Royal London Asset Management – market commentary

To find out more about our members download The Investment Advisory Committee leaflet. 

 Latest meeting minutes

Highlights

There have been three tactical changes in the last quarter:

There were three tactical changes in Q3;

  • July: The continued global economic recovery, aided by supportive monetary and fiscal policy, drove strong global equity returns in June, despite concerns regarding medium-term inflation and interest rates. The Federal Reserve considering inflation “transitory” led to a fall in bond yields and, alongside a bipartisan agreement on infrastructure spending, saw the US lead global equity returns. Europe also outperformed global markets, while Japan lagged. Given strong performance this year we tempered overweights in equities and commodities, taking profits as we sought to de-risk. We remained overweight global high yield bonds, underweight commercial property, while reducing underweights in gilts and corporate bonds.

  • August: July saw positive global equity returns, led by US markets, and supported by positive earnings and robust economic data. Inflation readings were again higher than expected but fixed income yields fell as recovery growth rates may have peaked. Summer markets could be volatile as stocks process a slowdown in growth rates, and as bond markets anticipate potentially higher interest rates. We reduced our overweight in global high yield bonds and cut underweights in gilts and corporate bonds. We also reduced our positive tilt to commodities, while our modest equities overweight and commercial property underweight remained unchanged.

  • September: Global equities reached fresh highs in August despite some mixed global economic data, with short term inflation numbers being most challenging for markets. Bond markets, however, continued to believe that inflation was a transitory issue after reassurance from major central banks.  Commodities and stocks remained strong in August as the global economic recovery continued. We maintained our overweight positions in both global high yield bonds and commodities, but marginally increased the modest positive tilt to equities. The portfolios moved marginally more underweight corporate bonds and increased the underweight in gilts given inflation uncertainty, and maintained the slight underweight in commercial property.

We took a positive view on the UK given the trade deal agreed with the EU last year, its successful vaccination programme and continued fiscal and monetary support for the economy. In addition, a large proportion of value-oriented stocks on UK indices made it an attractive given the ongoing market rotation. We were broadly neutral UK equities; after adding to the UK position at the end of last year, we maintained a marginal overweight into January before ending the quarter slightly underweight. Europe ex. UK looked less promising, and we held a slight underweight throughout the quarter as the vaccination programme there stumbled, and Covid-19 case numbers picked up in the period.

In depth

 

Highlights

There have been three tactical changes in the last quarter:

There were three tactical changes in Q2;

  • April: Global equities were strong in March, as successful vaccine programmes and loose monetary and fiscal policy reinforced positive sentiment. While global government bond markets settled, regional performance was mixed; ECB support saw European yields fall in contrast with global trends. Given strong global growth, we increased our overweight in equities, cut our commodities overweight, and increased underweights in gilts and corporate bonds. We also marginally tempered our overweight in global high yield bonds. Our underweight in commercial property was also slightly reduced.
  • May: Global equities delivered strong returns in April, as Covid-19 case rates fell across leading markets and stimulative fiscal and monetary policy stayed in place. While central banks ruled out near-term rate rises, bond markets remained conscious of medium-term inflation risks given expansionary policy in a strong global recovery this year. Given strong equity performance over the last three quarters, we tempered our equities overweight and increased our positive tilt to commodities which benefit in a global recovery. We remained overweight in global high yield bonds, underweight gilts, and slightly underweight commercial property.
  • June: Global equities were volatile in May but posted positive returns. After weaker than expected US jobs data dampened tapering concerns, proving constructive for equities, stronger than expected US inflation data dented markets in the following week. However, the Federal Reserve reassured markets that inflation is transitory, encouraging equities back towards all-time highs. Given strong equity performance over the last three quarters, we tempered our equities overweight and increased our positive tilt to commodities, which benefit in a global recovery. We remained overweight in global high yield bonds, underweight gilts and corporate bonds, and extended our underweight in commercial property.

We took a positive view on the UK given the trade deal agreed with the EU last year, its successful vaccination programme and continued fiscal and monetary support for the economy. In addition, a large proportion of value-oriented stocks on UK indices made it an attractive given the ongoing market rotation. We were broadly neutral UK equities; after adding to the UK position at the end of last year, we maintained a marginal overweight into January before ending the quarter slightly underweight. Europe ex. UK looked less promising, and we held a slight underweight throughout the quarter as the vaccination programme there stumbled, and Covid-19 case numbers picked up in the period.

In depth

 

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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.