Lemonade profiler30 January 2015
This profiler has been produced by Lemonade and Aegon accepts no responsibility for its accuracy or for any consequences arising if you use it to help you select an appropriate fund or portfolio of funds.
The following profiles are only for initial guidance. You should seek individual advice to make sure any given approach is suitable for you.
Lemonade has been selected by your employer to give advice about the pension scheme. As part of its service, it offers to give individual guidance about investment to help you choose the fund(s) most appropriate for your needs. To help with this initially, Lemonade has highlighted a range of portfolios of differing risk levels to help you work out what approach may be appropriate for you. These funds have been selected with collaboration from the Aberdeen Pension Scheme Investment Committee.
To use the portfolio:
- first select the risk category, from below, that best describes your attitude to risk and what risk you’re willing to accept in relation to your investments
- then use the risk profile table to select the portfolio that’s right for you (A-I) depending on your attitude to risk and how long you have until retirement
- then use the table of suggested portfolios to find out which selection of funds may be suitable for you
If you don’t want to take an active part in monitoring your funds as you get closer to retirement the lifestyle fund (Aberdeen Life Multi-Asset (excluding Property) Lifestyle fund) may be more appropriate. This is because the portfolios outlined below don’t have a lifestyle element, which automatically switches into less risky investments nearer to retirement.
Lemonade risk categories
The Lemonade risk categories aren’t the same as Aegon’s. The Lemonade risk categories are defined as follows:
Low risk - This category aims to minimise the risk of your fund falling. Your investment may contain a small amount in riskier assets such as equities to increase the chance of obtaining better longer term returns. However, this also means that returns may be modest with an increased risk of shortfall. As the majority of the investment may be in cash and or fixed interest assets, your fund value may be affected by interest rate changes. Increased amounts may be held in cash over shorter investment terms. Returns are generally expected to keep pace with or be slightly higher than inflation. The range of assets provides a spread to reduce the overall risk.
Low to medium risk - This category is for investments where you are prepared to take a modest risk. The fixed interest and cash portion will be smaller than a low risk fund but the returns will continue to be affected by changes in interest rates. The equity element will be larger than a low risk fund but smaller than more adventurous funds. There is greater risk of the fund falling in value than a low risk fund. Equally there are increased risks of shortfall and inflation rising faster than fund growth.
Medium risk - This category includes balanced portfolios that are designed to provide fund growth. The fixed interest portion is exposed to changes in interest rates. In order to reduce the risks of shortfall and inflation eroding the purchasing power of the investment, a significant part is invested in equities. The equity content increases the risk of your fund falling, especially over the short term.
Medium to high risk - This category is aimed at providing above average fund growth by having a higher proportion of equities than lower risk assets such as fixed interest and cash. Many of these equities could be in overseas companies and there may be an element in emerging markets. Returns can be subject to sharp short term fluctuations and also affected by currency exchange rate variations, meaning an increased risk of your fund falling. The above average growth prospects limit the risks of inflation and shortfall. To diversify the portfolio there is still likely to be an element of fixed interest, where the returns are affected by interest rate risk.
High risk - This category is for the adventurous investor who will take greater risks for the prospect of higher long term investment performance. The investor accepts a much greater risk of the fund value falling particularly over the short term. A significant proportion of the equity holdings may be in overseas and emerging markets to offer greater growth potential, lessening the risk of shortfall and the effects of inflation. Any fixed interest investment is likely to be smaller, limiting the risk of falling interest rates.
This table summarises the portfolio that the Lemonade profiler predicts might be suitable for a given time horizon and risk attitude.
|Term to retirement||Low||Low to medium||Medium||Medium to high||High|
The following table shows nine suggested portfolios for a given risk profile and investors will be responsible for reviewing and altering the asset allocation over time:
Sterling Long Dated Government Bond
|E||Managed Distribution |
Life Multi-Asset (excluding Property)
|F||Life Multi-Asset (excluding Property)||100%|
Life Multi-Asset (excluding Property)
|H||Life Multi-Asset (excluding Property) |
Life World Equity
|I||UK Growth |
Life World Equity
The above fund combinations can be used as a template. You're free to choose funds from the entire range available. It's important you review your fund combination on a regular basis and past performance is no guide to the future. The price of units can fall as well as rise.
All these funds are managed by Aberdeen Asset Management, with the exception of the Cash fund, which is managed by Kames Capital.
Please note that inflation and charges will erode the capital value of your fund over time. The "Real Growth" (after inflation and charges) on a Cash fund over any period of time can be negative, resulting in a decrease in your purchasing power.