Aegon has announced plans to significantly evolve its largest workplace default, the £12 billion Universal Balanced Collection fund, introducing innovative private market investment and enhanced environmental, social and governance (ESG) integration.
The transformation, which will take place from quarter three 2024, targets improved outcomes for over 700,000 members currently invested in the fund and aims to provide better risk-adjusted returns and value for money, offering access to a wider range of responsible investment opportunities.
The Universal Balanced Collection fund is available to Aegon Retirement Choices and One Retirement investors, as well as some off-platform products. Aegon will partner with three leading fund managers to provide a bespoke solution, for use within the Universal Balanced Collection, leveraging their dedicated, specialised expertise and resource.
BlackRock will manage a bespoke, diversified alternative private markets strategy, including private equity, private debt, real estate and infrastructure. It will also manage a fully ESG integrated passive equities and bonds strategy with a year-on-year decarbonisation target, from quarter four 2024.
Aegon Asset Management will manage a new multi asset credit mandate which includes global high yield, asset backed securities and emerging market debt strategies from H2 2024. In addition, they will also manage a private debt and alternative fixed income fund, subject to FCA approval and operational considerations, from early 2025.
Also in early 2025, subject to FCA approval and operational considerations, J.P. Morgan Asset Management will manage a bespoke strategy, offering exposure to private equity, infrastructure and forestry.
The proposal is to house the private market allocations within Long-Term Asset Fund (LTAF) structures, subject to regulatory approval. LTAF is a type of open-ended pooled fund, authorised and regulated by the FCA, that aims to invest efficiently in long-term illiquid assets.
Carne Group, a provider of fund regulation and governance solutions for the asset management industry, will be acting as the Authorised Corporate Director (ACD) of the Aegon Asset Management and J.P. Morgan Asset Management LTAF’s.
The fund objective and risk appetite of UBC will remain unchanged. The fund charge¹ is made up of a fixed management fee and additional expenses, the fixed management fee will not change, although an increase to additional expenses is expected.
Lorna Blyth, Managing Director, Investment Proposition, states: “We believe our changes will improve the growth potential of the Universal Balanced Collection and future Aegon funds that utilise these enhanced capabilities. The changes target robust risk management and diversification, to offer members improved outcomes and value for money.”
“This bold move also aligns with our commitment to reach net-zero greenhouse gas emissions for our full range of default funds by 2050, and to a 50% reduction in emissions by 2030². It also significantly supports our desire to invest £500 million in climate solutions by 2026; investments that directly contribute to climate change mitigation and/or adaption. We expect many of these solutions to come from unlisted equities which aligns with our Mansion House Compact aim to invest at least 5% of our default fund assets in unlisted equities by 2030.”
"On completion of the Universal Balanced Collection changes in 2025, we anticipate that we will have moved over £30 billion of default assets into funds that consider ESG factors.”³
In future, these enhanced capabilities will provide members across Aegon’s wider workplace default range with access to such innovative investment opportunities.
The value of investments isn't guaranteed and may go down as well as up. Investors may get back less than they invest.
¹ Where the fund is purchased within our off-platform products, fund, product charges and expenses are bundled to form the total charge. Fund and product charges will remain unchanged, although an increase to additional fund expenses is expected.
² Measured using carbon footprint across our full range of default funds. Emissions targets don’t apply to individual funds. 2030 target applies to scope 1 and 2 emissions from listed equities (shares) and corporate fixed income (bonds) only.
³ Since 2020.