“In response to the Chancellor of the Exchequer’s ‘Freedom and choice in pensions’ announcement in last year’s Budget, we are introducing our Retirement Range of risk-managed funds aimed at the needs of DC scheme members building up their investments as they plan for their retirement. We believe the range is simple, good value for money and easily adaptable to suit the needs of different individual members,” says Stuart White, Head of Institutional, UK, HSBC Global Asset Management.
The Retirement Range consists of a series of multi-asset ‘World Selection’ portfolios. First launched in 2009, and now sold in more than 20 markets around the world, “World Selection” is HSBC’s multi-asset flagship fund range, with assets under management of some £7.7 billion at December 2014. Originally designed for investors seeking portfolio diversification through a single investment, the portfolios provide exposure to a range of asset classes, including equity and bond markets across the world.
HSBC believes that, since the Budget, DC schemes are re-assessing their default funds and increasingly looking to provide solutions that are more tailored for their members. The Retirement Range consists of three risk-rated portfolios, Cautious, Balanced and Dynamic, to provide choice for members with different attitudes towards risk, and the ability to change their risk level should they wish. Across the range the investment team aims to smooth investors’ exposure to market fluctuations and thus, compared with a single asset investment, to provide improved risk-adjusted returns through broad diversification across many different asset classes, regions and currencies.
Pricing has been reviewed to fit within the Pensions Cap, with an annual management charge of 0.25% for each portfolio. The “Ongoing Charges Figures” will vary depending on the underlying asset mix, but are targeted to be between 0.46% and 0.53%(1).
Three key features offered by the range are:
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Dynamic asset allocation. Asset allocation is widely recognised to be a key driver of client outcomes and in World Selection this is monitored on an ongoing basis and adjusted in response to changes in valuation metrics or market conditions.
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Risk-focused. World Selection offers a range of portfolios of different risk budgets; the asset allocation varies according to each risk budget.
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Cost-efficient. The portfolios offer an efficient means of capturing beta, while use of alternative weighting schemes provides investors with a way of ‘upgrading’ from traditional market capitalisation weighting.
Caroline Hitch, Head of Wealth Portfolio Management and part of HSBC Global Asset Management’s £60 billion multi-asset business (one of Europe’s largest), is responsible for the Range. Caroline commented: “We have a well-established institutional-style investment approach, which is highly suited to the needs of trustees, sponsors and DC scheme members. The World Selection portfolios offer dynamic asset allocation, cost-effective portfolio construction and a robust investment process, all packaged together at a price that we believe offers great value. This is a solution that will work hard for scheme members.”
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