MI Savings Portfolios
The Managed Intelligently (MI) Savings Portfolios cater for savers who are concerned about investment loss. The four portfolios offer straightforward access to a sophisticated risk-management process executed by leading fund manager BlackRock.
The MI Savings Portfolios offer short-term downside management while making it easy to save in a pension.
Benefits of MI Savings Portfolios:
- Let savers choose the balance of risk and long-term growth potential that's right for them.
- Come with an extra layer of risk management that moves some of the portfolio into safer investments when BlackRock thinks markets are likely to suffer a sharp and sustained fall.
- Hold mainly low-cost investments, designed to perform in line with the markets they track.
- Are backed by our Funds Promise.
You can choose from four MI Savings Portfolios, each of which is designed to match a different risk appetite.
There’s no guarantee that fund objectives will be met. The value of investments can go down as well as up and investors may get back less than originally invested.
How MI Savings Portfolios work
BlackRock uses sophisticated asset allocation techniques to work out the optimal long-term strategic asset mix that matches each portfolio’s target risk level.
Added risk-management safeguard
The added safeguard moves money out of the diversified mix into safer investments, like cash, when the portfolio’s volatility gets too high and BlackRock thinks markets are likely to suffer large and sustained falls like we saw in the credit crunch. When volatility reduces, the portfolio moves back to its original diversified mix.
Chart depicting how Aegon uses added risk-management safeguard.
If volatility is too high we move 20% into safer investments.
If volatility is low we move back 5% at a time.
BlackRock may use its discretion to de-risk or re-risk by amounts other than those stated above.
The science behind the safeguard
When market risk goes up, markets have tended to fall, as you can see from the chart below. By moving into safer investments when volatility gets too high, savers may be cushioned from the worst of these falls.
The safeguard does not mean your investment won't fall in value and it may limit returns if risk goes up and markets do too, or if markets bounce back quickly.
Line graph depicting Market value (FTSE 100 unit price range 3000 to 7000), against Market risk (FTSE V/X unit price range 5 to 55) from 2008 to 2013.
Risk management in practice
The chart shows how the process could have worked during the credit crunch, if the funds had been available at that time.
Line graph depicting the return (range between £60 to £110) of a fund with safeguard and a fund without safeguard, between July 2007 and July 2010.
Source: BlackRock. Returns show how MI Savings (M) could have performed, based on its asset allocation at launch in April 2013 (43.8% overseas equity, 26.3% UK equity, 27.3% bonds and 2.6% global property). The chart assumes that the mix of investments only changes when the fund de-risks or re-risks. In reality, BlackRock would have changed it to adapt to market conditions too. The fund didn't exist over this period, so the chart is for illustration only. Past performance, whether simulated or actual, isn't a reliable indicator of future performance.
Monitoring and rebalancing
Because the portfolios are backed by our Funds Promise, we check them regularly to see if they're meeting expectations. That means:
- We check that the portfolios continue to match their respective risk appetites.
- We monitor the mix of investments chosen by BlackRock.
- We see if the added risk-management safeguard has kicked in during times of market stress.