Fund performance monitoring

When you invest with us, you’ll want to know that we’re keeping an eye on how things are going. Although we can’t directly influence how a fund performs, we can make sure that the funds are being managed in the way they say they will be and ask questions when we think an explanation is needed.

The way we monitor the funds we offer through our life and pension products takes in a number of steps;

  • We follow a rigorous process for monitoring fund performance along with a clear reporting framework through a committee known as the Investment Working Group. This group meets on a quarterly basis to discuss investment performance and other fund related issues.

  • Each month we review the investment performance of all our life and pension funds by comparing them against the performance of other funds with similar investment objectives or an appropriate benchmark. We look at both short-term and long-term time periods which helps us highlight any funds that are consistently under-performing.

  • For each fund we also look at a measure called volatility which looks at how much its price goes up and down over a set period. This is compared against funds in the same sector and means that we can spot any funds where the volatility is significantly higher or lower than the sector average. This can sometimes be a sign that a fund is taking more or less risk than similar funds and can prompt us to ask the manager of the fund for an explanation.

  • To help investors compare similar types of funds, they are grouped into sectors by the Association of British Insurers (ABI). We also use these ABI sectors to compare our assessment of investment performance for the funds we manage ourselves. Funds are also grouped into sectors by the Investment Association (IA) and we use these sectors when looking at our life and pension funds which are linked to an external fund manager. Funds with a more focussed investment strategy, such as those which are country specific, are assessed against an appropriate index. Funds which we think are showing performance lower than we would expect are put on a watchlist for closer review.

  • Sometimes it is not appropriate to contact the fund manager as the under-performance is a direct result of their established investment style and can be expected given certain market conditions. For example, a fund manager may have a value approach rather than a growth approach and in periods where growth stocks are preferred the performance of a value style fund will suffer. 

  • Where we think it is needed, we will contact the fund manager for an explanation, for example if the under-performance has been going on for sometime. Typically we will ask for an explanation as to the cause of the under-performance and the actions that the manager intends to take.

  • Once an explanation has been received, we will consider the response and any actions the fund manager is proposing whilst continuing to monitor performance.

  • There may be rare occasions where underperformance has continued and we are not satisfied with the explanations, or we consider that any proposed changes are not going to help and could increase risk or change the fund. In these cases we could decide to remove the fund from the range on offer and explain to policyholders in the fund what we plan to do.

  • For the funds we manage ourselves, there are a number of steps we can take from simply agreeing that certain approaches would not be used in the future to the fund manager being relieved of their duties.

  • As well as this monthly monitoring we also look out for any funds making changes, such as a new name or a different style of investing. Where we believe these are important we will write to our policyholders who are invested in the fund, and their financial adviser, to let them know. 

We hope you found this overview of how we monitor funds useful. You should always remember that although we monitor the funds we make available, the responsibility for deciding if a fund is suitable for your needs lies with you and your adviser. The value of investments can fall as well as rise and you may not get back the full amount you invested.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised and regulated by the Financial Conduct Authority.