Announcing important changes to the Universal Balanced Collection (UBC)

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We’re pleased to announce our latest enhancements to the Universal Balanced Collection (UBC).

UBC is both a standalone fund and core component in a number of Aegon’s lifestyle and default investment options for workplace pensions, and we’ve regularly reviewed and developed UBC since it was launched in 2001. Our most recent changes reflect our commitment to carbon reduction, but crucially also our belief that investing in an environmentally responsible way could improve long-term returns and make UBC better prepared for a lower-carbon future, although this is not guaranteed.

Overview of the changes

We’re changing some of the underlying funds in the UBC (and associated funds) and the mix of underlying investments. The changes will take place from 24 September 2021 onwards.

These changes affect the UBC and all funds across our pension fund ranges which use the UBC as part of their investment strategy. The UBC has a flexible mandate which allows us to change its asset allocation and underlying investments. The fund’s objectives, the Aegon risk rating and the charges you pay for the UBC or any of the affected funds (detailed below) are not changing as a result of these enhancements. 

The changes in detail

The UBC’s previous target asset allocation is shown below:

  • Aegon Diversified – 70% of the fund, managed by BlackRock
  • AAM Asset Allocator fund – 15% of the fund, managed by Aegon Asset Management.
  • SE Baillie Gifford Balanced Managed – 3.75%, managed by Baillie Gifford
  • SE BlackRock Balanced Managed - 3.75%, managed by BlackRock
  • Aegon BNY Mellon Multi-Asset Balanced fund - 3.75%, managed by BNY Mellon
  • SE Man Balanced Managed - 3.75%, managed by MAN GLG

We’re making the following changes from 24 September 2021:

  • We’re adding two new active funds to the AAM Asset Allocator fund (AAF), both of which have a sustainable investment focus:
    • Aegon Sustainable Diversified Growth fund
    • Aegon Global Sustainable Equity fund
  • The SE Man Balanced Managed is being removed from the UBC - its allocation is moving into the AAM Asset Allocator fund

The new UBC target asset allocation is:

  • Aegon Diversified – 70% of the fund, managed by BlackRock.
  • AAM Asset Allocator fund – 18.75% of the fund, managed by Aegon Asset Management.
  • SE Baillie Gifford Balanced Managed – 3.75%, managed by Baillie Gifford
  • SE BlackRock Balanced Managed - 3.75%, managed by BlackRock
  • Aegon BNY Mellon Multi-Asset Balanced fund - 3.75%, managed by BNY Mellon

We’ve also taken this opportunity to implement a full re-balancing of the fund to ensure all holdings are at their target weights.

The affected funds are:

  • Universal Balanced Collection pension
  • Universal Balanced Collection (ARC)
  • Universal Lifestyle Collection pension
  • Universal Lifestyle Collection (ARC)
  • Universal Balanced Collection (Annuity Target) pension
  • Universal Balanced Collection (Annuity Target) ARC
  • Universal Balanced Collection (Flexible Target) pension
  • Universal Balanced Collection (Flexible Target) ARC

Please note, our life version of the UBC will not change.

There are some one-off costs associated with these changes, which are standard expenses when investments are traded in a fund to change the mix of investments. The changes will take place over the course of several days to try to minimise their cost impact. As with any investment fund, charges and additional expenses can vary over time.

You’ll notice the changes on our website and in our literature from October onwards. The changes will be implemented gradually across our material, so you may notice both the old and new information in use for a short time.

We reserve the right to add, remove and replace funds within the UBC with the aim of making sure it continues to meet its aims and objectives. We will review the asset allocation regularly and may make changes from time to time.

There is no guarantee the fund will meet its objective. The value of an investment can fall as well as rise and investors could get back less than they originally invested.

Why we’re making these changes

We believe the changes we’re making will give us greater flexibility to adapt to different market conditions and therefore support the financial security of pension scheme members.

Specifically, the addition of two actively managed Aegon Asset Management sustainable funds reflects our commitment to integrate environmental, social and governance factors (ESG) as key investment criteria for all our funds. These changes, combined with previous changes to the SE BlackRock Balanced Managed fund, mean that around 26% of the UBC is now invested with a sustainable and environmental focus. It is worth saying again that the fund’s objective remains unchanged.

Investing in line with ESG goals is not new to Aegon. We believe our history of investing responsibly and ethically means we are well placed to deliver the ESG changes that are taking place across the UK’s pension industry. As part of Aegon’s commitment to Responsible Investing we have an investment philosophy that defines what we want to invest in and is designed to ensure we meet our stated goals of being ‘net-zero’ for our default workplace funds by 2050, with a 50% reduction by 2030.

Looking ahead

Over time we plan to increase the ESG element of UBC, with a greater focus on the environment and carbon reduction to help us achieve our net-zero goals. Please note that we don’t plan to change key aspects of UBC’s investment approach, including its multi-manager structure and its use of active funds.

Further information

For more information on these funds, you can view individual fund factsheets via the ‘Fund prices and performance’ page on our website and selecting ‘Aegon Retirement Choices (ARC)’. We don’t produce factsheets for specific lifestyle fund year variants, however you can find more information on lifestyle funds here.

What this means for investors

You don’t need to do anything. If you’d like more information, please speak to your financial adviser. If you don’t have one, you can find one in your area at moneyhelper.org.uk.