Changes to the Scottish Equitable BlackRock Aquila Consensus and Scottish Equitable BlackRock Aquila Consensus Lifestyle funds

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From 1 October 2016, the benchmark and asset allocation for the Scottish Equitable BlackRock Aquila Consensus and Scottish Equitable BlackRock Aquila Consensus Lifestyle (growth stage) funds changed. As a result, the fund objectives of both funds have been updated to reflect these changes.

These changes will also apply where these funds are available via Aegon Retirement Choices (ARC).

What’s changed?

The fund’s benchmark has changed from the CAPS Pooled Fund Survey Balanced Fund Index (excluding Property and Emerging Markets) to the Association of British Insurers (ABI) 40-85% Shares pension sector average.

The fund aims to match the performance of its benchmark by investing in the same assets to the same degree. This means the fund objective and asset allocation will be updated to reflect its new performance benchmark. As a result of the change, the fund will now have the ability to invest in emerging market equities and property to the same degree as its new benchmark.

Why have we made these changes?

The funds benchmark, the CAPS Pooled Fund Survey Balanced Fund Index, is being discontinued and will no longer be published.

BlackRock has chosen to replace the CAPS Pooled Fund Survey with the ABI 40-85% Shares pension sector average, which includes a small portion in emerging markets equities and property, which the previous benchmark didn’t. However, the percentages in each are too small to make a material difference to the risk profile of the fund.

The change in benchmark will result in some changes to the fund’s asset allocation (mix of investment). To give you an idea of the differences between the old and new benchmarks, the table below shows the asset allocation for both as at June 2016. For instance, you can see that the biggest difference between the two is the amount in US equities (13.9% as opposed to 22.0%, a reduction of -8.0%). However, the weightings will fluctuate month to month.

Asset type% weighting
NewOldChange
UK equities 30.9 32.1 -1.1
US equities 13.9 22.0 -8.0
Canadian equities 0.7 0.0 +0.7
Japanese equities 4.4 7.5 -3.2
European equities 13.5 14.3 -0.8
Pacific ex-Japan equities 3.1 3.7 -0.7
Emerging Markets equities 1.4 0.0 +1.4
Property 0.6 0.0 +0.6
UK Fixed Interest 10.6 8.6 +2.0
Overseas Bonds 12.5 5.2 +7.3
Sterling Cash 8.4 6.6 +1.7
TOTAL 100 100  

Sources: BlackRock, CAPS Pooled Fund survey, ABI Mixed Investment 40%-85% Equities pension sector average. Allocations are as at 30 June 2016.

Fund objectives

There will also be a slight change in the fund objectives to reflect the change in benchmark. The old and new objectives are shown below.

Scottish Equitable BlackRock Aquila Consensus  prior to 1 October 2016

Scottish Equitable BlackRock Aquila Consensus  from to 1 October 2016

This fund aims to match the performance of the CAPS Pooled Fund Survey Balanced Fund Index (ex Property and Emerging Markets) by investing mainly in UK and overseas equities (shares) but also in gilts, index-linked gilts, UK and overseas corporate bonds and cash.

This fund aims to closely match the performance of the ABI 40-85% Shares pension sector average after charges by investing mainly in UK and overseas equities (shares), fixed interest and cash.

Scottish Equitable BlackRock Aquila Consensus  Lifestyle prior to 1 October 2016

Scottish Equitable BlackRock Aquila Consensus  Lifestyle from 1 October 2016

This fund uses a two-stage investment process called lifestyling. In the early years (the growth stage) it aims to match the performance of the CAPS Pooled Fund Survey Balanced Fund Index (ex Property and Emerging Markets) after charges by investing mainly in UK and overseas equities (shares) but also in gilts, index-linked gilts, UK and overseas corporate bonds and cash. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into the Scottish Equitable BlackRock Aquila Over 15 years UK Gilt Index fund and (in the final two years) into our Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our lifestyle funds from time to time and may change how they work if we believe this to be in the best interests of investors.

This fund uses a two-stage investment process called lifestyling. In the early years (the growth stage) it aims to match the performance of the ABI 40-85% Shares pension sector average after charges by investing mainly in UK and overseas equities (shares), fixed interest and cash. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into the Scottish Equitable BlackRock Aquila Over 15 years UK Gilt Index fund and (in the final two years) into our Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our lifestyle funds from time to time and may change how they work if we believe this to be in the best interests of investors.

There’s no guarantee that the fund’s objectives will be met. The value of this investment can go down as well as up and investors may get back less than they invested.

What does this mean for investors?

Existing investors don’t need to do anything.  The fund manager, charges and Aegon risk rating will remain the same.

The changes will be implemented gradually across our material so you may notice the old and new information for a short time.

Please speak to financial adviser if you’re unsure about what the changes mean for you. You can find one in your area at unbiased.co.uk