FOR ADVISERS ONLY
Strategic Asset Allocation (SAA) changes to our Governed Range
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.
| Cautious | Balanced | Adventurous | |||||||
|---|---|---|---|---|---|---|---|---|---|
| GP1 | GP2 | GP3 | GP4 | GP5 | GP6 | GP7 | GP8 | GP9 | |
| 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% |
| Cautious | Balanced | Adventurous | |||||||
|---|---|---|---|---|---|---|---|---|---|
| GP1 | GP2 | GP3 | GP4 | GP5 | GP6 | GP7 | GP8 | GP9 | |
| 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.
| GRIP1 | GRIP2 | GRIP3 | GRIP4 | GRIP5 | |
|---|---|---|---|---|---|
| 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% |
| GRIP1 | GRIP2 | GRIP3 | GRIP4 | GRIP5 | |
|---|---|---|---|---|---|
| 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.