From 22 August 2024, we’re making some changes to our Long Gilt fund available across our insured Pension and Aegon Retirement Choices (ARC) fund ranges.
We’re writing to all those affected to let them know about this.
The changes in more detail
From the date above we’re:
- Updating the fund objective to increase the types of investments the fund can hold. The fund will now be able to invest up to 35% in highly rated (AAA-A rated) UK and overseas corporate bonds (loans to companies).
- Changing the fund’s benchmark from FTSE Actuaries UK Conventional Gilts Over 15 Years Index to a composite (blend) of indices that reflect the new mix of investments in the fund.
- Changing the name of the fund from the Long Gilt fund to the Annuity Target fund.
- Changing the Association of British Insurers (ABI) Sector the fund sits in.
Why we’re making these changes
Fund objective and benchmark
The fund objective explains how the fund invests and what it’s trying to achieve for investors.
The fund previously only invested in long-dated UK government bonds (loans to the UK government) and cash. The fund can now invest in a wider range of UK government bonds and other types of UK and overseas fixed interest assets including corporate bonds.
We believe being able to choose from a wider range of fixed interest investment will help the fund manage risk and support our aim to deliver better customer outcomes. However, there’s no guarantee the fund will meet its objectives.
The fund’s benchmark will also change to reflect the new mix of investments within the fund. Benchmarks are used to measure a fund’s performance against similar types of investments, similar markets or regions.
Fund name
We’re also changing the fund name to better reflect the objective of the fund and how the fund is used more widely.
The old and new fund name, objective and benchmark are in the table below with the changes highlighted in the new objective.
| Pension Fund | |
|---|---|
| Old fund name | New fund name |
| Long Gilt | Annuity Target |
| Old fund objective | New fund objective |
| This fund aims to perform broadly in line with the FTSE UK Gilts Over 15 Years Index, net of fees, by investing primarily in UK government bonds (gilts) with maturity dates of 15 years and longer. | This fund aims to outperform the benchmark, net of fees, by investing primarily in UK government bonds (gilts). The fund can also invest a smaller amount in UK and overseas corporate bonds. |
| Old benchmark | New benchmark |
| 100% FTSE Actuaries UK Conventional Gilts Over 15 Years Index | Composite (blended) benchmark of: 50% FTSE Actuaries UK Conventional Gilts Over 15 Years Index 30% FTSE Actuaries UK Conventional Gilts 5-15 Years Index 20% ICE BofA 5+ Year AAA-A Sterling |
Source: Aegon UK
| Aegon Retirement Choices (ARC) | |
|---|---|
| Old fund name | New fund name |
| Long Gilt (ARC) | Annuity Target (ARC) |
| Old fund objective | New fund objective |
| This fund aims to perform broadly in line with the FTSE UK Gilts Over 15 Years Index, net of fees, by investing primarily in UK government bonds (gilts) with maturity dates of 15 years and longer. | This fund aims to outperform the benchmark, net of fees, by investing primarily in UK government bonds (gilts). The fund can also invest a smaller amount in UK and overseas corporate bonds. |
| Old benchmark | New benchmark |
| 100% FTSE Actuaries UK Conventional Gilts Over 15 Years Index | Composite (blended) benchmark of: 50% FTSE Actuaries UK Conventional Gilts Over 15 Years Index 30% FTSE Actuaries UK Conventional Gilts 5-15 Years Index 20% ICE BofA 5+ Year AAA-A Sterling |
Source: Aegon UK
The value of an investment can fall as well as rise and is not guaranteed. You could get back less than you pay in.
ABI sector
As a result of the changes we’re making to the mix of investments in the fund, the fund will now sit in the ABI Sterling Fixed Interest sector. Funds are often grouped into different sectors depending on the type of investment. Grouping them in this way can make it easier to compare their performance against similar types of fund and investment strategies.
What current investors need to do
Existing investors don’t need to do anything.
We’ll update our literature and our website as soon as we can, but investors may notice the old and new information in use for a time.
More information about this fund can be found on the ‘Fund prices and performance’ page on our website and selecting either ‘Other fund ranges’ or ‘Aegon Retirement Choices (ARC)’.
Please speak to a financial adviser if you’re invested in this fund and are not sure what the changes mean for you. If you don’t have one, you can visit moneyhelper.org.uk/choosing-a-financial-adviser to find the right one for you.