An explanation of our investment terminology.
Absolute return funds
These funds aim to deliver positive returns regardless of market conditions, rather than simply setting out to beat a benchmark. They often state a target return above the return from cash. this means that, unlike traditional funds, they cannot achieve their objectives by beating a falling benchmark. they use active asset allocation, without benchmark or sector constraints, aiming to move into whichever market they believe will deliver the best returns at any given time.
Active equity investing refers to funds that attempt to beat the market and selects securities that will perform better than the average.
A commodity is a basic good that is interchangeable with other goods of the same type. For example a barrel of oil is the same product regardless of the producer. Traditional examples of commodities are grains, gold, beef, oil and natural gas.
These invest in the shares of commodity related companies such as mining companies and oil exploration companies. They give the investor exposure to movements in commodity prices (in those sectors that the fund invests in) with an additional layer of active management as the manager seeks out the companies with the best prospects in their sector.
The most flexible of our investment strategies. Advisers can create a bespoke custom strategy or portfolio of funds with automatic rebalancing using a choice of asset allocation and funds from our range.
These are funds within our pension range which are managed by other external fund managers. Each of our external fund managers has its own investment style, and they include some of the biggest and most trusted names in the financial industry, for example, Schroders and Fidelity.
An investment option with a choice ranging from ready-made governed portfolios to individual funds managed by RLAM and a comprehensive collection of external fund managers.
Governance is the framework established to ensure decisions are taken in the best interests of investors. We want our customers and their advisers to be confident that key decisions are taken in the context of stated objectives - and in line with their expectations at the time they decide to invest with us. Governance is carried out at Royal London by the IAC.
Investment Advisory Committee (IAC)
The IAC meet quarterly to monitor the investment objectives, performance and asset allocation benchmarks for our internal funds and the Matrix funds. They report into the Royal London board, whose remit covers every aspect of the running of our unit linked fund range.
Critically, the committee operates independently of Royal London Asset Management RLAM who control the day-to-day running of our internal funds.
An investment option made up of target and flexible lifestyle strategies. We have a range of target lifestyle strategies, each risk graded, with ongoing governance and automatic switching to lower risk portfolios as the client nears retirement. A flexible lifestyle strategy is where the adviser chooses a route through the Governed Portfolios and decides which equity fund to use and what to target at retirement.
Lifestyle Range - Target
Our target lifestyle strategies are designed to reflect the various risk profiles of our clients. Ranging from low to high risk, they are available with either tracker equity or active equity and can target either cash, annuity or drawdown.
Managed Lifestyle Strategy
The 'off-the-shelf' solution using our Managed Funds. This effectively gives a pre-destined path for the client's investments to travel along, switching from higher to lower risk managed funds as the client nears retirement. This is designed for someone with a balanced attitude to risk.
The set of external funds with a strict governance process wrapped around them. The Matrix is split into equity sectors and risk categories.
A tracker fund attempts to match the return from the market rather than selecting securities that will perform better than the average.
Rebalancing is the process of realigning the investments within a pension plan, to the set percentages that have been selected. This helps to smooth out the differences in growth rates between different funds. Rebalancing can be done on a monthly, quarterly, half-yearly or annual basis.
Royal London Asset Management. The fund manager for our own internal funds.