Strategic Asset Allocation (SAA) changes to our Governed Range

We're making changes to the SAA of our Governed Portfolios and Governed Retirement Income Portfolios with the aim of improving risk adjusted returns for our customers.
Governed Range SAA changes 2020

Download our brochure for further information on our approach and changes.

Our latest strategic asset allocation review is based on the risk metrics for each portfolio and uses a combination of quantitative data from our model and pragmatic investment experience. This will result in the following changes:

• In the Governed Portfolios: an increase in our allocation to high yield bonds and a reduction in property.
• In the Governed Retirement Income Portfolios 1 and 2: an increase in equities and high yield bonds and a reduction in gilts, index linked gilts and corporate bonds.
• We are also increasing our exposure to emerging and developed market equities and reducing our UK equity exposure. More information on the equity changes can be found here.

What’s Changing?

The new Governed Portfolio Strategic Asset Allocations are shown below, along with how these have changed.

 CautiousBalancedAdventurous
 GP1GP2GP3GP4GP5GP6GP7GP8GP9
Equity 52.5% 42.5% 15.0% 67.5% 55.0% 32.5% 80.0% 70.0% 45.0%
Property 15.0% 10.0% 5.0% 15.0% 12.5% 10.0% 12.5% 12.5% 10.0%
Commodities 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
GHY 5.0% 5.0% 10.0% 2.5% 5.0% 5.0% 2.5% 2.5% 2.5%
Gilts 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
IL Gilts 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
Corporate Bonds 5.0% 9.2% 16.7% 1.7% 5.0% 11.7% 0.0% 1.7% 9.2%
Cash 7.5% 10.0% 15.0% 5.0% 7.5% 12.5% 0.0% 5.0% 10.0%

 

 CautiousBalancedAdventurous
 GP1GP2GP3GP4GP5GP6GP7GP8GP9
Equity - - - - - - - - -
Property -2.5% -2.5% - -2.5% -2.5% -2.5% -2.5% -2.5% -
Commodities - - - - - - - - -
GHY 2.5% 2.5% - 2.5% 2.5% 2.5% 2.5% 2.5% -
Gilts - - - - - - - - -
IL Gilts - - - - - - - - -
Corporate Bonds - - - - - - - - -
Cash - - - - - - - - -

The new Governed Retirement Income Portfolio Strategic Asset Allocations are shown below, along with how these have changed.

 GRIP1GRIP2GRIP3GRIP4GRIP5
Equity 12.5% 22.5% 30.0% 40.0% 50.0%
Property 5.0% 7.5% 7.5% 10.0% 10.0%
Commodities 5.0% 5.0% 5.0% 5.0% 5.0%
Global HY 6.3% 6.3% 6.3% 7.5% 8.8%
UK HY 6.3% 6.3% 6.3% 7.5% 8.8%
Gilts 16.7% 12.5% 10.0% 5.0% 2.5%
IL Gilts 16.7% 12.5% 10.0% 5.0% 2.5%
Corporate Bonds 16.7% 12.5% 10.0% 5.0% 2.5%
Cash 15.0% 15.0% 15.0% 15.0% 10.0%

 

 GRIP1GRIP2GRIP3GRIP4GRIP5
Equity +2.5% +2.5%      
Property          
Commodities          
Global HY +3.75% +2.5%      
UK HY +3.75% +2.5%      
Gilts -3.3% -2.5%      
IL Gilts -3.3% -2.5%      
Corporate Bonds -3.3% -2.5%      
Cash          
Why are we making these changes?

We undertake a Strategic Asset Allocation review of both the Governed Portfolios and Governed Retirement Income Portfolios every three years to ensure we are continuing to deliver strong risk-adjusted returns for our customers. The outcome of our latest review showed there was greater opportunity to provide stronger risk-adjusted returns over the long term by moving to the SAA positions above.

All changes will be phased in over the next few months in line with the transition plan we have agreed with RLAM.

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

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.