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Managed Retirement Investment Strategy
When using a lifestyling arrangement, wouldn't it be better to use funds which were specifically built according to the rules of asset allocation and diversification - and which had specific time frames built into them?
With the introduction of the Managed Strategies, we have gone back to basics and created 9 separate portfolios, each one aligned to both risk and time.
Using a modelling system based on complex statistical calculations, we believe we have created an optimal range of asset allocation benchmarks designed to maximise real returns (i.e. returns greater than the rate of inflation) over a specified time horizon.
This now means that a lifestyle arrangement can be created by simply choosing the appropriate route from right to left depending upon the demographics of your scheme or the needs of an individual.
We have created a "pre-set" lifestyle option called Managed Retirement Investment Strategy (Managed RIS). The Managed RIS uses the range of Scottish Life Managed Portfolios, which has an asset allocation geared both towards risk and time.
Investment returns may fluctuate and are not guaranteed. The price of units can go down as well as up. Past performance is not a guide to the future.
How it works
Here is how it would work as a default option for a group scheme:
Every investor with 15 years or more to retirement is wholly invested in the Long term Adventurous portfolio, met by the Adventurous Managed fund
At 14 years and 11 months to retirement, the monthly switching facility is triggered and their investment will begin to move into the Managed fund, corresponding to the Medium term Balanced portfolio.
By the time the investor has 10 years until retirement, they are wholly invested in the Managed fund. Their investment begins to move towards the Short Term Cautious portfolio, or the Defensive Managed fund.
With 5 years left until retirement, they will be wholly invested in the Defensive Managed fund.
Thereafter, we'll shift the portfolio between our Defensive Managed fund, Short (5yr) Index Linked fund and Deposit fund to protect investors from inflation during this last, critical phase in the run up to retirement.
The final 5 years therefore look like this:
Investors with less than 15 years to retirement will join the process at the point which corresponds to their time until retirement, to the closest month. For example, an investor with 13 years and 6 months to retirement joins with a different proportional split between the Adventurous Managed fund and Managed fund, than someone with 12 years and 8 months to retirement.
Investors choosing the Managed RIS through our Individual contract will follow the same path, but the switching facility is carried out annually.
