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Investment  >  Our Proposition  >  Lifestyling  >  Managed RIS

Managed RIS

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

An investor with 15 years or more to retirement is wholly invested in the Long Term Adventurous portfolio, met by the Scottish Life Adventurous Managed fund.

However, at 14 years and 11 months to retirement, there is a gradual, proportionate shift of their investment into the next stage of the process - which is towards the Medium Term Balanced portfolio, satisfied by the Scottish Life Managed fund.

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 and Managed funds, than someone with 12 years and 8 months to retirement.

By the time the investor has 10 years until retirement, they are wholly invested in the Managed fund and remain so for that year. When they reach the point that they have 9 years and 11 months to retirement, their proportional split begins to move towards the Short Term Cautious portfolio, or the Scottish Life Defensive Managed fund, month by month.

Clearly, the same process continues until such time as the investor has 5 years until retirement upon which they will be wholly invested in the Defensive Managed fund.

For the final 5 years, we make use of some of our other funds with the recognition that this phase in saving for retirement is absolutely crucial - in that the protection of the fund in "real" terms is vital. Throughout this time, the scheme will shift between the Defensive Managed fund (Def Mgd), the 5 year Index Linked Gilt fund (5yr IL) and the Deposit fund (Dep).

The final 5 years therefore look like this:

Crucially, we continue to adopt the principles of asset allocation, risk and time throughout the whole lifetime of the strategy - and not relying upon one single asset class until the very last year - where we believe it is entirely appropriate to do so.