Changes to our Managed Fund Range

Important notice for The Retirement Account customers

In January, we sent you a letter to let you know about the Managed range fund changes. We regrettably made an error in the email address within the contact details located on the bottom of the letter. If you wish to contact us by email, the correct email address is customers.ra@canadalife.co.uk.

 

To achieve better outcomes for our end customers, we are refreshing the suite of Managed funds across Canada Life Asset Management and Canada Life. The funds will have a new part to their objectives of seeking to remain within defined risk profiles. This change will be reflected in the new name of the range, which will be called the Diversified Risk Managed fund range. The names of the individual funds will also change.

These changes are designed to give the funds the potential to provide a stable risk profile, ensure that they can fully meet their new objectives and unify the range. The comparator benchmarks will remain the same.

What is changing?

Move to volatility targeting
We are amending the objectives of the funds to include volatility targeting (which means the performance of the fund will move up and down in the short-medium term to adjust to the target), because we believe the consistency and stability of a fund’s risk profile is important to investors and decision-making advisers. The funds’ investment strategy will change accordingly. Broadly speaking, this means the Multi-Asset team combining their assessment of the macroeconomic environment and view of different asset classes with the expected volatility of, and correlations between, those classes to determine asset weights for the portfolios. The funds will be monitored both internally and by the external strategic asset allocation (SAA) provider to ensure they remain on track to meet their volatility-managed objectives, and rebalanced where necessary.

Removal of currency and geographic restrictions
We are removing the current currency/geographic restrictions that are in place on the risk profile 3 fund (see table below).  This will allow this fund to acquire exposure to overseas markets, widen the choice of investments and provide greater diversification.

Completing the risk profile suite
We will also be launching an additional fund to the risk profile suite, the LF Canlife Diversified Risk Managed V Fund, to ensure that the range has funds spanning all risk profiles from 3-6 (with existing Canada Life Asset Management funds changing to risk profiles 3-5 in December and the risk-profiled 6 fund available in Q1 2023).

Why are they changing?

Although the funds already have a limit on their equity holdings, which to some extent naturally constrains volatility, they do not target any specific volatility range. They are therefore susceptible to moving up and down the risk scale depending on the proportion of higher risk assets held, and the changing volatility of risk assets in the fund.

By contrast, volatility-targeted funds are designed to maintain a stable risk profile, through management within specific volatility parameters.

We will therefore amend the investment objectives so that the funds do not move away from a specified risk profile on a scale of 1 to 10, where 1 is the lowest risk and 10 is the highest. These profiles can be seen in the table below. 

When will these changes take effect?

The first of these changes will be taking place on 12 December 2022, below you will find a table of those listed funds that will be affected, with the full suite of the complete risk profile for the Managed range to be complete in Q1 2023.

Further information on the additional changes that will occur across Canada Life Asset Management and Canada Life UK and Canada Life International will be notified in due course.

Canada Life Asset Management
Original name	New name	New risk profile	Date of change
LF Canlife Managed 0% - 35% Fund	LF Canlife Diversified Risk Managed III	3	12/12/22
LF Canlife Managed 20% - 60% Fund	LF Canlife Diversified Risk Managed IV	4	12/12/22
New fund	LF Canlife Diversified Risk Managed V	5	12/12/22

 

Canada Life Limited – The Retirement Account
Original name	New name	New risk profile	Date of change
Canlife Managed (0% - 35% Shares) Fund	Canlife Diversified Risk Managed 3	3	12/12/22
Canlife Managed (20% - 60% Shares) Fund	Canlife Diversified Risk Managed 4	4	12/12/22
New fund	Canlife Diversified Risk Managed 5	5	12/12/22

 

Canada Life Limited – Select Account and legacy bonds and pensions*
Original name	New name	New risk profile	Date of change
Canlife Managed (0% - 35% Shares) Fund	Canlife Diversified Risk Managed 3	3	Q1 2023
Canlife Managed (20% - 60% Shares) Fund	Canlife Diversified Risk Managed 4	4	Q1 2023
New fund	Canlife Diversified Risk Managed 5	5	Q1 2023

*Funds Series: LS3; LS4; LS5; PS4; PS5

We have set out some potential questions you may have about the changes.

Frequently Asked Questions

Are the changes down to poor fund performance?
No. The Canada Life Asset Management Multi-Asset team decided to make this change to offer a consistent range of risk-targeted funds to better meet investors’ needs in the future. Risk targeted funds allow investors the ability to choose different levels of risk which can best fit their long-term investment objectives. The new investment process allows the fund range to be globally diversified across equities, fixed income, UK property and cash and are managed to meet pre-defined target volatility bands.

Will these funds now suit a different client profile?
No. Canada Life Asset Management aims to deliver the greatest likelihood of optimal risk-adjusted returns, while ensuring client portfolios remain within the boundaries of pre-agreed risk profiles. To achieve this, we combine different global asset classes, strategies and investment styles for each risk profile into a single portfolio. Diversification is core to the fund range. The Multi-Asset team will analyse market trends throughout the cycle with the aim of gaining exposure to factors with higher expected returns whilst staying aligned to the targeted risk bands.

Will there be any changes to the existing fund managers?
No. Our experienced multi-asset team will remain in place, ensuring a smooth transition.

 

If there are any further queries, please contact us on:

The Retirement Account
Customers:  0800 032 7690
Advisers: 0800 032 7689
Opening times: Monday - Friday, 08:30 - 17:30

Onshore Bonds
0345 606 0708 or +44 1707 651 122
Opening times: Monday - Friday, 09:00 - 17:00

Canada Life International Products
0333 015 1382
Opening times: Monday - Friday, 09:00 - 17:00

 

Important information
The value of investments may fall as well as rise and investors may not get back the amount invested
The multi-asset funds may invest in property funds that may be illiquid and subject to wide price spreads, both of which can impact the value of the fund. The value of the property is based on the opinion of a valuer and is therefore subjective.