Growing your investments

Black floral watering can

There are a wide range of methods and markets in which we can grow your investments. Our Chief Investment Officer Piers Hillier explains how

PIERS HILLIER: The wealth business is really important to members because essentially we are the investment engine that powers member’s returns. Ultimately, whether you’re in one of our life funds or whether you’re in our pensions business, we provide the majority of the investment solutions to members, and hopefully provide a very good outcome for you.

When I was talking to members this time last year we hadn’t had the referendum in the UK, we hadn’t had the election in the United States. We talked about the impact potentially of a vote to leave would be impacted in Sterling terms but also in the property market, and both of those areas were impacted immediately after the referendum. Pleasingly, in some ways, the property market having seen some of our competitors need to gait their funds, we didn’t have to do that. We managed members through what was a tricky time, and actually we’ve continued to invest in property and that uncertainty provided some great opportunities.

The one area that was the greatest weakness was Sterling. Now, the good news for our members is that we invest internationally so we address part of that risk of weakening of Sterling, but generally speaking the outcome post-referendum in the UK in particular is a positive stimulus for markets.

The biggest challenge actually in investment performance terms last year was within the UK itself. We pride ourselves in finding good, innovative companies and often those in the small/medium size part of the market, and that area struggled last year because of the uncertainties of the referendum vote. Larger companies, where they tend to be more internationally focused, we tend to buy and compare those against an international peer group, so we tend to naturally be underweight the FTSE 100 and overweight the mid-cap space, and that was the wrong decision last year. Other than that we actually did very well. Our fixed income funds perform well, our credit funds actually despite the uncertainty in markets generated good returns, our property funds did very well last year, and we’re very pleased with the outcome in terms of we saw particularly in the sale of the Royal Liver building last year, with a significant premium and there was some good results across the board from our investments teams.

We did have a good year so part of our growth in assets from £80 to £100 billion was the fact we had markets rise over double digits but in addition to that we were successfully raising third party assets, because of strong performance we’ve delivered both for members but also for external customers, particularly in credit but also in our cash business.

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