What happens when you invest with us?

Piers Hillier, Chief Investment Officer at Royal London, explains how we invest With Profits members' money to get you the best possible returns.


CAPTION: What happens with the money you invest in your Royal London policy? And how exactly do we make your money grow? Hear from the people who manage your funds…

PIERS HILLIER: Hello, I’m Piers Hillier. I’m the Chief Investment Officer at Royal London Asset Management. We manage the majority of the Groups assets on behalf of With Profits policy holders.

So, Royal London invests savings of With Profits policy holders in a range of asset classes. Those could be companies, and we can invest in the shares of those companies, or we can invest in the debt of those companies. We can invest in the debt of governments, government bonds, or we can invest in cash. Property’s another asset class we include. So we look at a range of asset classes and then we put that together, reflecting current market conditions, where we are in the economic cycle.

Now, just thinking of the economic cycle, what does that mean? Essentially if you think over time, there are moments where we see periods of expansion and growth and that’s often stimulated because interest rates have fallen and we see better prospects. As growth expands, the central banks will often want to curb our enthusiasm so we don’t overdo it, and have too much of a party, so we raise interest rates and that then causes the economic cycle to slow.

Now, sometimes we do a bit too much, we apply the brake a bit too hard and we overcorrect and we see an economic slowdown. When that happens, central banks respond, they cut interest rates, provide additional liquidity and that hopefully stimulates future economic growth. So that’s what the economic cycle is.

At various points of that economic cycle, different asset class perform, so when things are good, often assets that are based on the economic growth like shares and property will continue to perform quite well. When things slow down, you want a bit more security and stability so government bonds, cash, can be better stools of value.

So, ultimately, what we’re trying to do is give you long term return on your investment. We think over the long term diversification is absolutely critical. The balance between risk and rule is really, really important and we think we’ll provide a better outcome for you as policy holders if we invest that way.

So one of the key differences about Royal London, relative to other asset managers, is that we’re a mutual. We’re owned by you, the With Profits policy holders and other members, and therefore I’m not conflicted in terms of how we run the business. So sometimes our competitors will want to run and provide the best outcome for the funds that they run, but they also have to satisfy the needs of shareholders which may be different. Whereas here, at Royal London, we understand what your long term requirements are as a With profits policy holder, so not only do we hopefully provide great outcomes for you but by owning the business you get the benefit of our success and running the business more effectively, more efficiently and receiving a member dividend.

One of the joys for With Profit members, why it would generate even slightly better returns than just simply the assets we run, is that you own the mutual, so as we grow the business, not only do you get the investment returns that we’ve generated, but you also get a share of the profits that we’ve actually generated in that year.

CAPTION: We review our strategies regularly and aim to provide the best possible outcomes for you. Visit our Articles and videos page for more information on investing your money.