Scottish Life, the pensions specialist arm of the Royal London Group, has announced changes to be made to two of the emerging market funds in the ‘Matrix' -- a group of externally managed equity funds categorised by sector and by risk relative to a benchmark.
From 17 December 2012, the SL Emerging Markets Core Plus (First State Global Emerging Markets Leaders) will be re-categorised from 'Core Plus' to 'Specialist'. In addition, from the same date, the underlying investment in Henderson Emerging Market Opportunities will change to JPM Emerging Market Opportunities. These changes reflect Scottish Life's commitment to strong and effective ongoing investment governance.
Lorna Blyth, Investment Marketing Manager at Scottish Life, explained:
"We take a proactive role in the governance of our investment fund range, with regular reviews of the investment objectives, performance and benchmarks; and we make changes when necessary. These changes were decided following a quarterly review by the Investment Advisory Committee (IAC).
"In recent times, the First State fund has been consistently breaching our upper 5% tracking error limit for Core Plus funds. This has been a common development amongst many emerging market funds, and is expected to continue into the future. The IAC therefore concluded that the fund should be re-categorised as ‘Specialist'. As such, it would be expected to consistently deviate away from the benchmark by more than 5% on a three year basis. This re-categorisation means investors have a clearer picture of the amount of risk being taken in this fund.
"The Henderson Emerging Markets Opportunities fund has experienced a sustained period of underperformance. After reviewing rigorous analysis, the IAC concluded that they no longer have confidence in the fund's ability to deliver strong future performance and that it should be replaced with the JPM Emerging Markets Fund. The JPM fund has a long track record of strong performance, managed by a market-leading investment house. We believe that the manager's style and process are better suited to delivering consistent performance in varying market conditions.
"The process of replacing an underlying fund has been designed to be a seamless transition. We communicate the changes to advisers and policyholders well in advance so they can be confident that we continually monitor the fund range and make adjustments when we feel they are necessary."
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