Guide to investing
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When you invest with us, it’s important to know that your funds are being managed in the right way. Although we can’t directly influence how a fund performs, we regularly monitor all funds to make sure that they’re being managed in the way we expect them to be.
We follow a rigorous process for monitoring fund performance, with a clear reporting framework, through the Investment Working Group. This committee meets every quarter to discuss investment performance and fund-related issues.
Every month, we review the investment performance of all our life and pension funds. We do this 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 to help us highlight any funds that are consistently under-performing.
For each fund, we look at a measure called volatility which looks at how much the fund price goes up and down over a set period. This is compared against funds in the same sector, so 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 use these ABI sectors to compare our assessment of investment performance for the funds we manage ourselves. Funds are 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 underlying collective fund such as an OEIC or unit trust.
Funds with a more focussed investment strategy, where comparison against other funds in the sector is not meaningful, are assessed against an appropriate index or a performance target. Funds which we think are showing performance lower than we would expect are put on a watchlist for closer review.
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.
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