TRUSTNET magazine Issue 6 / April 2015
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TRUSTNET
magazine
Issue 6 / April 2015
i s s t i l l l i fe
Why there
t i n a n n u i ties
lef
Gold blend Swindler’s list Bond bombshell
Build your own Don’t get caught out Bond funds that won’t blow
pension portfolio by conmen up in your face
TRUSTNET
magazine
Issue 6 / April 2015
EDITOR’S LETTER
IN THIS ISSUE
BOND BOMBSHELL
With rate rises imminent, Adam Lewis likens picking a
bond fund to navigating a minefield.
P. 16-19
W
ith the UK about to go to INCOME MATTERS
the polls in one of the most Schroders looks at the steps you can take to help you
unpredictable general achieve your income investing objectives.
elections in living memory, you could P. 20-21
Gold blend Swindler’s list Bond bombshell
be forgiven for thinking we would
focus our efforts in this month’s
QUICK ON THE DRAWDOWN
Build your own Don’t get caught out Bond funds that won’t blow
pension portfolio by conmen up in your face
edition on how a swing to the political
right or the left could affect your portfolio. You wouldn’t let the government tell you how to spend
ISSUE 6 At Trustnet Magazine, however, we like to be a bit your salary, so why let them do it with your pension?
different and instead have decided to focus on what may P. 22-23
turn out to be one of the final major changes made by
CREDITS the current government – the pension reforms. Under STEADY READIES
new rules, anyone aged over 55 now has unprecedented Canaccord Genuity’s Simon McGarry looks at three
access to their pension pot, allowing them to withdraw stocks with a history of consistent dividend growth.
TRUSTNET MAGAZINE (FORMERLY
INVESTAZINE) IS PUBLISHED BY it slowly, put it into drawdown straight away, keep it P. 25
THE TEAM BEHIND FE TRUSTNET IN invested, or blow it all on a Lamborghini. I know which
SOHO, LONDON. one I would do – that’s right, keep it invested (I’m really
quite a boring guy).
WHAT I BOUGHT LAST
WEBSITE: WWW.TRUSTNET.COM
But is this new-found freedom really such a good This month, Square Mile’s Jason Broomer explains
EMAIL: EDITORIAL@FINANCIALEXPRESS.NET
thing? Head of Trustnet Direct John Blowers certainly why he bought BlackRock Continental European
CONTACTS: seems to think so, pointing out that you wouldn’t let Income.
the government or your employer tell you what to P. 26
General
do with your salary, so why let them do it with your
16
Josh Ausden, BOND
Head of FE Trustnet Content pension? Some financial advisers are not so sure,
T: 0207 534 7661 however, pointing out that people who are not so BOMBSHELL
Anthony Luzio
Editor
financially savvy and suddenly come into possession of
T: 0207 534 7680 a large amount of money naturally begin to attract the
attention of conmen. Turn to page 2 to find out how to SWINDLER’S LIST
Art Direction & Design avoid becoming a victim. Anthony Luzio looks at how to avoid becoming the
Javier Otero
W: www.feedingcrows.co.uk
Elsewhere in this issue, Cherry Reynard looks at how victim of a scam.
to create your own retirement portfolio with the right P. 2-3
Editorial blend of capital protection and income-generating
Gary Jackson characteristics, while Pádraig Floyd finds out why the
News editor (FE Trustnet)
so-called death of annuities may have been greatly GOLD BLEND
T: 0207 534 7680
exaggerated. Cherry Reynard explains how to create a portfolio
25
Alex Paget
Senior reporter Away from this month’s major theme, Adam Lewis with the right blend of capital protection and income-
T: 0207 0207 534 7697 looks at the various bond sectors, and with rate rises just generating characteristics.
Daniel Lanyon
Reporter
around the corner, likens finding the right bond fund for P. 5-7 STEADY
T: 0207 534 7640 you to navigating a minefield. READIES
Anthony Luzio BACK FROM THE DEAD
Sales Editor, Trustnet Magazine
Richard Fletcher The death of annuities may have been greatly
Head of publishing sales exaggerated, writes Pádraig Floyd.
T: 0207 0207 534 7662
Richard Casemore P. 8-10
Account manager
T: 0207 534 7669
Jack Elia
In association with:
IN FOCUS
Account manager Liontrust Special Situations, Temple Bar Investment
T: 0207 534 7698 Trust and the Vanguard LifeStrategy range are all
Photos supplied by Thinkstock and
under the spotlight this week.
Photoshot P. 12-15
Cover Illustration: Javier Otero
MONEY SCAMS
“You can also go on the
“SCAMS ALWAYS WORK Pensionwise website [www.
BY PRESSURING YOU. pensionwise.gov.uk/].”
IF SOMEONE TELLS You may wish to pass on this
advice to your friends and loved
YOU TO DO SOMETHING ones, because finding out they
IMMEDIATELY WITH have been a victim of one of
these scams can be almost as
YOUR MONEY, TAKE A heartbreaking as being defrauded
STEP BACK” yourself.
This was a situation Chris Spear,
managing director of advisory
firm Spear Financial, almost found
tax year, there is nothing in the himself in recently.
financial services industry that you “A neighbour knocked on my
need to rush for.” door two weeks ago and asked me
Wise says that conmen will also to look at something,” Spear said.
prey on the fact many people do “He was in the process of
not want to come across as rude. transferring his pension out of
“When someone is on the phone a final salary scheme into an
to you, asking if you can hang up overseas one, which promised to
on them can feel awkward – and put the money into a property
there is no doubt it is hard to do – fund in the UK and said it
but you need to do it.” guaranteed 10 per cent returns a
“If they try to pressure you, tell year.”
them you’ll get back to them and
ask for their name and address – WATCH OUT FOR PREDATORS
this is the worst possible scenario “He should have come to me weeks
from a scammer’s point of view earlier, but he had already started the
and they will invariably hang up.” transfer of funds,” Spear added.
“This was really sad – he was a
WALK AWAY working class guy who had worked
“My advice is always to walk away, all his life and his pension pot was
go and have a think about things, do only £60k.”
your own research, speak to friends Fortunately, in this case the story
and family – this is something we had a happy ending.
SWINDLER’S LIST
even tell our clients to do after “I managed to ring up his
talking to us.” pension scheme’s trustees and
BE ON YOUR GUARD Clive Collins, director at they stopped the transfer,” Spear
“Always be on your guard and financial planner McCarthy Taylor, continued.
do your research before you do says it is important to ensure “The trustees were actually
anything,” he advised. anyone you talk to about your very good – they kept sending
With recent pension reforms leading to conmen buying and selling the financial details of “Many people we have spoken to pension works for a reputable him notices saying ‘watch out for
say someone has contacted them company. predators’ and that’s what made
thousands of people, Anthony Luzio finds out how to avoid becoming a victim claiming to deliver something that “First of all, check the FCA him come to me.”
sounds too good to be true, such as register to make sure they are a “If you get anyone making
A
lthough The Daily Mail is anyone aged over 55 the chance to and people who had fallen on hard guaranteed returns of 10 per cent a bona fide firm. You can either ask those sorts of promises, speak to a
not exactly synonymous cash in their pension pot – allowing times. year – so this should immediately for their FCA number – which financial adviser – most of them
with the phrase “a force for them to access huge sums of money “There can be no hotter data,” he set alarm bells ringing.” should be on all their literature – won’t charge for a preliminary
good”, it received numerous and that was previously locked away. said. “They’re vulnerable.” He adds another common theme or you can go on the FCA website.” chat. Most of us aim to build
well-deserved plaudits for a recent Unfortunately, these reforms But how can you stop yourself involves being told to make a “Check they are a chartered relationships with clients – we are
expose showing that sensitive appear to have given the green light becoming a victim? decision straight away. firm to ensure the quality of their not after a quick buck.”
details of pension pots were being to fraudsters who admit to targeting Chris Wise, investment director “Scams always work by advice reaches a certain level. They Spear has one final piece of
sold to conmen for as little as 5p. vulnerable pensioners. One of of Gemmell Financial Services, says pressuring you. If someone tells should have a current statement advice that can stop most scams in
The investigation was published them told an undercover reporter there are simple things everyone you to do something immediately of professional standing to show their tracks straight away.
just days before the implementation from The Daily Mail about how can do to protect themselves against with your money, take a step back.” they are approved by the Personal “Do not respond to cold calls,” he
of government reforms giving he exploited the recently bereaved every financial scam. “Unless it is the end of the Finance Society.” finished.
2 trustnet.com trustnet.com 3
MONEY
Picture your
ANNUITIES
perfect retirement
For many people approaching retirement, capturing a regular income
while maintaining the value of capital is a key focus.
Schroders’ highly experienced Multi-Asset Team, who manage over
£4 billion in global income focused strategies, have a clear aim
of delivering an attractive and sustainable monthly income from an
GOLD BLEND
Although retirees no longer have to buy an annuity, creating a portfolio with the right
blend of capital protection and income-generating characteristics presents its own
investment portfolio while carefully managing risk. Note, the value
of investments and the income from them can go down as well as
problems, writes Cherry Reynard
up and you may not get back the amount invested.
A
nnuities may be yesterday’s capital left at the end. But how can She says a good rule of thumb
To find out more about Schroders retirement solutions, speak to
story in the brave new world investors achieve this? is that if an investor is seeking an
your financial adviser or visit schroders.co.uk/retirement for your
of retirement planning, Anna Sofat, founder and income rate around the level of a
chance to win a dream holiday. but they do retain a number of managing director of Addidi Wealth, flat annuity (currently 5 to 5.5 per
compelling features: notably, they says retirees need to be realistic: cent), they should expect some
offer an attractive, guaranteed “Investors must decide whether they erosion of their capital pot. She
income for life, even if retirees have are happy for the capital to run out believes a more realistic figure
EPERFEC
UR to give away all their cash to realise in their lifetime or whether they is 4 per cent a year. At this level,
it. The new environment brings want to leave something behind. retirees may experience some
T
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the seductive possibility of holding Few people are happy to let it run fluctuation in their capital, but it
pension assets in investments that out – it will affect the level of risk should be more or less preserved
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ANNUITIES
STILL A PLACE FOR “INVESTORS MUST useful tool for generating income,
Fund picks
ANNUITIES while at the same time preserving
With this in mind, the investment ACCEPT HIGHER LEVELS or even increasing capital, but they
industry has sought to come up with OF RISK, BUT WITH need to be flexible. He adds: “They
a range of solutions to the retirement
dilemma. Strategic bond funds were
GLOBAL AND UK EQUITY must be able to invest in different
assets through different stages of the
an early option, perhaps blended INCOME FUNDS, THEY market cycle.” Twenty Four Dynamic
with a global equity income fund. NEED TO KNOW WHAT IS UK EQUITY GLOBAL Bond, which is managed
Multi-asset income funds are the ENHANCED INCOME by an experienced team
current hot favourite, with groups UNDER THE BONNET” He believes investors need to ensure INCOME EQUITY of specialists.
drawing on their resources to blend they have some exposure to the
different income-generative asset stock market and other risk assets. JASON HOLLANDS – I INCOME PETRONELLA WEST
classes – bonds, equities, property degree of certainty and security For example, he suggests investors would pick Threadneedle – We like Artemis High
and alternatives – in a single, as an annuity. This means many consider enhanced equity income UK Equity Income as a JASON HOLLANDS – Income, which sits in
dynamically managed fund. retirees should stick with them funds, which use simple derivatives core UK equity income International equity the Strategic Bond
Petronella West, head of or, depending on the size of their to enhance their yield. Investors fund with a pragmatic diversification is sector. It has three
private clients at wealth manager pension pot, consider a combination may have to give up some growth investment style, important, and here I experienced managers
Investment Quorum, believes of an annuity purchase to secure a potential to obtain this higher but I would consider would look at Artemis in Adrian Frost, Adrian
that annuities still have a place in basic income for life – perhaps to income, but this is less likely to be dovetailing this with a Global Income, which Gosden and Alex Ralph,
some portfolios, depending on the pay for essentials – and a portfolio in a concern for retirees. Haynes says fund such as Standard is currently invested in who aim to achieve an
individual’s health and resources. drawdown where they are prepared investors should incorporate some Life UK Equity Income about 90 companies from above-average level of Libor) with less than half
She also believes the much- to take more risk. lower risk global equity income Unconstrained to 28 countries across the income together with the volatility of global
trumpeted annuity buy-back option He says: “Ultimately a exposure as well. achieve exposure further globe. The managers the prospect of a rising equities over a rolling
is unlikely to benefit many retirees, drawdown portfolio, like any There is no single solution to down the market cap believe these stocks have income stream and three-year period.
pointing out consumers perennially balanced investment strategy, annuity replacement. The answer spectrum. strong growth prospects some capital growth
underestimate how long they are needs a combination of equities will be a multi-asset portfolio of and can increase their over the longer term. GAVIN HAYNES – We like
going to live and overestimate (to increase the portfolio’s value some kind, whether that is a specific GAVIN HAYNES – I dividends. The fund mainly invests JP Morgan Multi-Asset
investment returns. ahead of inflation), fixed income multi-asset fund, or a blend of equity like Schroder Income in UK bonds, preference Income – this is not a
She says every alternative to and commercial property for yield income funds, bonds and alternative Maximiser, which invests GAVIN HAYNES – I’d look shares and equities. It is multi-manager fund, but
an annuity introduces a different diversification and some absolute income-generative investments in dividend stocks, but at Newton Global Higher yielding 4.3 per cent and invests directly in assets,
type of risk, adding: “Bond markets return to smooth out volatility.” such as commercial property. The then uses derivatives to Income in this area. has a strong long-term with up to 35 per cent
have interest rate risk, and the US Gavin Haynes, investment right solution will also depend on enhance the yield. The Manager James Harries performance record. each in global equity and
is moving closer to an interest rate director at Whitechurch Securities, how much capital investors want to fund is structured to has a good track record. global high yield bonds
rise. Also, investors now have to go says multi-asset income funds are a preserve. produce a higher income He is cautious and tends and the remainder in
to the high yield market to find a than the stock market. to underperform when MULTI-ASSET other assets. It has a
reasonable yield, but then there is We also like Fidelity markets are soaring, but good spread of assets
higher default risk. It is a difficult Enhanced Income. is more stable during JASON HOLLANDS – and a good dividend.
time and it is very risky to put times of market stress. For absolute return
together a strategy based entirely on As such, this is likely to exposure, I like Invesco PETRONELLA WEST –
fixed income.” be suitable for retirees. Global Targeted Returns. Here we like the Premier
Given the current environment, This is essentially an Multi-Asset Monthly
West believes that a portfolio of PETRONELLA WEST umbrella fund for about Income fund, which
good quality equity income funds, – We like the Vanguard 25 underlying distinct provides an above-
with the option to move into FTSE All-World Dividend strategies, which average level of income,
lower risk assets such as bonds Yield ETF, which seeks to invest across a wide payable each month. The
when the environment changes, track the performance of range of asset classes managers’ investment
is probably investors’ best bet. She the FTSE All-World High including equities, style blends assets within
adds: “Investors must accept higher Dividend Yield Index. The bonds and currencies. the portfolio, based upon
levels of risk, but with global and current yield on this ETF The strategies offer decisions made from
UK equity income funds, they need is 3.03 per cent, which is incredible diversification both bottom-up and
to know what is under the bonnet. paid quarterly. across investment ideas, top-down strategies.
Are they buying companies such each of which aims They could be described
as Unilever, for example, or smaller to generate a regular as “contrarian” given
companies?” BONDS but small return. The they like to add value
objective of the fund is to by consistently locking
A BIT OF BOTH JASON HOLLANDS – I’m achieve a gross return of in their profits from the
Jason Hollands, managing director a big advocate of funds 5 per cent a year above portfolio. The fund has a
at Tilney BestInvest, agrees that no with flexible mandates UK interest rates (as current yield of 4.8 per
single fund will provide the same and my pick here is measured by 3 month cent.
6 7
MONEY ANNUITIES
New pension rules offering greater freedom and flexibility may not turn out to be
the stake through the heart of annuities that many experts had been predicting,
writes Pádraig Floyd
T
he recently implemented over their income stream. Although the term annuity has
pension reforms announced McPhail says the greatest become unpopular due to the
by chancellor George enthusiasm for withdrawals is low levels of income the products
Osborne in April 2014 were said to among those in their mid-to-late 50s generate in the current economic
have signed the death warrant for dipping into cash for a car/holiday/ environment, an annuity remains
the unpopular annuity market. kitchen, but he believes those in the best way to provide a guaranteed
However, just as Mark Twain their 60s and beyond will buy some income, if people can just get over
once corrected an infamous rumour annuity and stay flexible with the the word.
about his own demise, so we can rest. The demand for annuities has
confidently state that the reports Even that 50 per cent who rejected encouraged MGM to launch a new
of the death of the annuity market an annuity may reconsider in later version of its existing product,
have been greatly exaggerated. life: “They may think about it in which it calls a money-back annuity.
A recent Hargreaves Lansdown their 70s,” McPhail continued. “If This pays out for up to 30 years at
survey of a thousand people found the trend of market uncertainty and age 65, by which time the investor
that half would not use any of their risk continues, it may lead them to will have got their money back.
pension money to buy an annuity. believe they need a lock-in.” As for the annuity market being
However, the other half said they Andrew Tully, pensions technical dead, Tully completely rejects this
would choose an annuity for part of manager at annuity provider notion. In fact, he expects the market
their income, with 10 per cent using MGM Advantage, fully agrees with to continue in much the same way;
all their pension on an annuity. McPhail’s assessment: “People don’t in 2014, for example, more money
Three in four (75 per cent) of those like taking risk, especially in later was committed to annuities than
surveyed said a guaranteed income life. Most people want money in the drawdown, considered to be the new
that would not run out was either bank just like a salary every month, default option.
quite important or very important because it is what they are used to.” “If there was a time not to be
to them. Tully says the new ability of selling annuities, it would have been
pensioners to pass on their savings the last six to nine months, but there
IT AIN’T OVER YET to their family is the component was £4 or £5bn put into annuities
This shows that despite the of flexibility that consumers want at the worst possible time in their
hyperbole about the annuity market, most of all. history,” said Tully.
many savers will choose the security
of an annuity product, says Tom
McPhail, head of pensions research
at Hargreaves Lansdown. ANNUAL ANNUITY BUSINESS UK
“Savers require three things
from their retirement income – YEAR NEW CONTRACTS NEW PREMIUMS (£000)
flexibility, guaranteed income and 2014 188,645 6,939,130
comparatively good investment
returns,” said McPhail. “However, 2013 353,192 11,892,165
you can only ever have two out 2012 419,587 14,037,430
of three of these things at any one
time.” 2011 399,055 11,180,334
Investors will therefore place 2010 426,392 11,032,588
security above flexibility and access
in order to have a degree of certainty Source: Association of British Insurers
8 trustnet.com trustnet.com 9
ANNUITIES
These are the growth figures you
don’t want to see in your next ISA
Data from the Association of “AN ANNUITY REMAINS individual consumer, package it up,
British Insurers (ABI) (see table) collateralise it and trade it. And we
shows that while annuity sales THE BEST METHOD OF all know where that got us with the
fell sharply in 2014, almost seven DISTRIBUTING WEALTH mortgage market.” Annual Platform Fees over 10 years*
million contracts were signed, most With little chance of a workable
of those after the new freedoms IN A MARKET THAT solution for trading an annuity, the £1,000
were announced in the March 2014 ENSURES PEOPLE freedoms will still have a positive 0.45%
Budget. DO NOT RUN OUT OF influence on the annuity market, as £900
Tully accepts they won’t be for far as Polson is concerned. 0.40%
everyone, but with the flexibility of MONEY” Savers may shop around more £800
0.35%
death benefits – and the addition of a than they did before, and if making £700
money-back guarantee – he believes an active choice, may choose a better
they will continue to satisfy the only be offered a price based upon rate. £600
requirements of anyone who has a what they paid for their annuity, said Insurers may also bid more to get 0.25%
£500
modest retirement fund of less than Tully. annuity business, which they need
£250,000. This doesn’t right the perceived to balance their books. £400
original wrong, he says, but merely
SECOND-HAND ANNUITIES “crystallises a poor value income WHAT HAPPENS NEXT? £300
Trustnet Direct
In March 2015, Osborne announced stream into a poor-value lump McPhail expects variations on
£200
the possibility of a secondary sum”. Would that be appreciated by guarantees and death benefits and
market in which to trade annuities. consumers? perhaps switching options that £100
Although welcomed by some Perhaps in some cases, he suggests, may provide an opportunity to
market commentators, others but does that make it right? He adds: periodically withdraw a small sum 0
considered it to be patent nonsense. “If the Financial Conduct Authority in exchange for a reduced monthly 1yr 2yrs 3yrs 4yrs 5yrs 6yrs 7yrs 8yrs 9yrs 10yrs
As the UK is now in the throes of a thinks people were actually mis-sold income.
general election campaign, McPhail annuities, they should do something He also expects to see renewed
*The graph displays platform fees plus the cost of 5 transactions per annum with Trustnet Direct compared with
warns against investors holding on about that, not look at such a development of deferred annuities
platforms charging 0.45%, 0.40%, 0.35% and 0.25% per annum in platform fees. Assumes £15,000 new ISA limit
for a chance to cash in their annuity. convoluted way of addressing such a to provide an income stream that
“The secondary market feels like problem.” kicks in at around 85 for later invested each year for 10 years and assumes 5% growth net of charges.
a sideshow,” he said. “Bear in mind a life care, for instance. Pricing was
lot of what happened in the Budget WINNERS AND LOSERS considered expensive in the past,
centred on things that cannot be Mark Polson, principal of specialist but it offers an elegant solution for The good news is that if you invest the new ISA limit of £15,000 per annum over the next 10 years and it grows at 5% per annum
legislated for in this parliament.” financial services consultancy the anyone who runs the risk of running net of charges, you’ll have built a nest egg of over £198,000 tax-free.
A Labour government – or a Lang Cat, says the only winners out of money in old age.
coalition led by Labour – may see from a secondary annuity market Polson believes that cashflow The bad news is that platform fees can seriously damage your wealth, as the chart above shows.
a move away from these freedoms are likely to be the life companies matching – which is common
altogether, as many experts are and their shareholders. in mature occupational pension At Trustnet Direct, we charge 0.25% in platform fees but cap it at just £250 max per annum (£200 + 5 trades at £10 per trade).
concerned the reforms have “If the annuity market is not funds – may have some future at an
damaged the annuity market. working properly, you’re simply individual product level. We may not be the cheapest on day one, but when your investments grow, your charges don’t.
“After all, an annuity remains the allowing consumers to be screwed The market is getting closer to the So, if you want a premium platform, without the premium price tag, open your next ISA with Trustnet Direct.
best method of distributing wealth again,” said Polson. “You’d have to point where investment companies
in a market that ensures people do trust life companies to give a better may offer something that targets
not run out of money,” said McPhail. deal than they have already, which individual liabilities. Trustnet Direct does not provide advice on the suitability of investments. It is an execution-only service. If you are unsure
There may be a benefit at the would simply destroy shareholder “This may be a combination of about the suitability of investments, seek independent financial advice.
lower end of the market where value.” products or through the use of
very small amounts of income may Women will be double losers, target date funds, which have a set The price and value of investments and their income fluctuates: you may get back less than the amount you invested.
appear less appealing than a lump as gender equality has also maturity in a certain year", says Past performance is no guarantee of future performance.
sum. However, Tully has a problem undermined annuities. Polson.
with commentators who say this is a “Women now cannot get better What is certain is that annuities Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.
way to exit a poor value annuity. levels of annuities than men, so will have a place in the market and
Even if at the point of while the price may have been will increasingly be blended with
annuitisation the investor could gender-based on purchase, it cannot other savings such as drawdown and
have received another £1,000 a year be on resale,” Polson added. ISAs to deliver greater security of Set your account up now at:
from shopping around, they will “This only works if you forget the retirement income to consumers.
www.trustnetdirect.com
10 trustnet.com Trustnet Direct is a trading style of Trustnet Limited, Authorised and Regulated by the Financial Conduct Authority.
IN FOCUS
FUNDS TRUSTS
LIONTRUST SPECIAL SITUATIONS TEMPLE BAR INVESTMENT TRUST
With the bottom-up approach taken by managers Julian Fosh and Anthony Cross proving The contrarian approach taken by manager Alastair Mundy means Temple Bar can often
its worth in falling markets before, is this the fund to navigate the election uncertainty? lag its peers - which is the case today. But does this make it the perfect time to buy?
A T
s we enter into a time of cent, while its UK All Companies per cent since launch. aking a value approach term investors given that both the its dividend was 25.59p per share
political uncertainty in sector and FTSE All Share At the moment, approximately to the equity market is a shares and underlying portfolio in 2002, while last year it was
the UK, many investors benchmark both lost money. 40 per cent of the portfolio proven way to outperform, are cheap. 38.88p.
are selling down their domestic What’s more, Liontrust Special consists of large cap companies and renowned contrarian investor Investors who buy in now will no Given the manager’s track
exposure. Does this mean that Situation has a top-decile risk- and the rest is held in small and Alastair Mundy has put that doubt hope Mundy can repeat his record, the trust’s dividend history
some top-performing funds such adjusted performance record since medium caps. process to work successfully over performance since he took on the and the fact the portfolio – both at
as Liontrust Special Situations are launch, with a Sharpe ratio of 0.52. This formula has gone down the years. portfolio in October 2002. a share price and underlying level
being overlooked? The fund also has a top-decile well with FE Research, meaning With his focus on bombed-out However, there is another – is cheap relative to the past,
Income funds have certainly annualised volatility of 13.89 per the fund has made its way on to companies that he thinks are reason why investors may want to now may be a good time to take a
proved popular in recent years cent over the same time period. the FE Select 100 list. due to rebound, both his Investec take a closer look at Temple Bar. closer look at Temple Bar.
and it’s easy to see why, but at the Liontrust Special Situations The team said: “This fund UK Special Situations fund and It is, after all, an equity income
same time, growth funds seem to combines the best ideas of two benefits from the best of the two Temple Bar Investment Trust have trust and its yield of 3.3 per cent MANAGER: Alastair Mundy
have been ignored. other funds run by Fosh and Cross fund managers, as Fosh prefers beaten their respective sectors looks attractive considering the FUND SIZE: £788.7m
The £1.5bn Liontrust Special – Liontrust UK Smaller Companies to focus on large and medium and the FTSE All Share since he yields on offer from cash and SECTOR: IT UK Equity Income
Situations fund invests in UK and Liontrust UK Growth. This companies and Cross on smaller has been at the helm. bonds. Investment trusts can LAUNCHED: June 1926
companies with growth in mind and blend means that the fund covers ones. We consider this fund to be Given the contrarian nature of also “smooth” their dividends YIELD: 3.3%
follows a well-defined investment the entire UK equities universe, one of the best available in the UK his process, however, there can by retaining 15 per cent of their DISCOUNT/PREMIUM: -4.27%
process. giving the managers and their All Companies sector.” be times when he lags the wider annual earnings so they can OCF: 0.48%
It is run by FE Alpha Manager team a wide selection of stocks to The fund has achieved total market – which is the case today. maintain or increase their payout GEARING: 0.00%
duo Julian Fosh and Anthony choose from. returns of 211 per cent since launch, Both his offerings have found in bad years – a feature not CROWN RATING:
Cross, who have a high-conviction Despite having such a large which is more than twice that of its themselves in the bottom quartile available to their open-ended
portfolio of 51 companies that offer area of choice, Fosh and Cross benchmark and sector average. It over the past 12 months, due rivals.
distinctive products with strengths consistently manage to pick the has also beaten its sector in seven of to Mundy’s high weighting to This has helped Temple Bar
that competitors would struggle to cream of the crop, which is evident the last nine full calendar years and cash, his short on the S&P 500 increase its dividend in every one
reproduce. in a top-decile alpha rating of 7.13 its benchmark in six. and stock-specific issues such of the last 31 years. For example,
This bottom-up approach can as positions in oil majors and
provide peace of mind for investors, supermarkets such as Tesco.
as the star managers’ stock picks Temple Bar has been hit
should, in theory, survive even the PERFORMANCE IN 2011 particularly hard – not only has PERFORMANCE OVER MANAGER TENURE
toughest bear markets. its NAV return been poor, but its 350%
Liontrust - Special Situations FTSE All Share IA UK All Investec Asset Management Ltd - Temple Bar
An example of this was the 15% (7.54%) (-3.46%) Companies discount has widened substantially 300% Investment Trust (317.46%)
fund’s performance in 2011. Over (-7.04%) as well – meaning it has lost 2.75
10% 250%
the course of the year, it achieved per cent over the past year while FTSE All Share (214.55%)
a positive total return of 7.54 per 5% the FTSE All Share is up 6.2 per 200%
cent. 150%
MANAGER: Julian Fosh and 0% Temple Bar is now on a 4.27
100%
Anthony Cross per cent discount to NAV, having
-5%
FUND SIZE: £1.48bn traded on a premium for most of 50%
SECTOR: UK All Companies -10% the past three years. 0%
LAUNCHED: 10/11/2005 As a result, Winterflood’s -50%
-15%
CROWN RATING: Simon Elliott says the trust’s
Oct 02
Oct 03
Oct 04
Oct 05
Oct 06
Oct 07
Oct 08
Oct 09
Oct 10
Oct 11
Oct 12
Oct 13
Oct 14
Jan 11
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
discount is now in “nosebleed
territory” and represents an
Source: FE Analytics
attractive opportunity for long- Source: FE Analytics
12 trustnet.com trustnet.com 13
Picture your
perfect retirement
PENSIONS
For many people approaching retirement, capturing a regular income
while maintaining the value of capital is a key focus.
VANGUARD LIFESTRATEGY
Schroders’ highly experienced Multi-Asset Team, who manage over With passive investing on the rise, Gary Jackson looks at a range of indexed funds
£4 billion in global income focused strategies, have a clear aim that offer exposure to global markets while matching the investor’s risk appetite.
P
of delivering an attractive and sustainable monthly income from an
investment portfolio while carefully managing risk. Note, the value
assive investments have funds. Investors can buy individual new, lower risk asset allocation
grown in popularity over trackers for less than this, of before manually rebalancing their
of investments and the income from them can go down as well as
recent years and many course – the Vanguard US Equity portfolio.
up and you may not get back the amount invested.
experts expect this trend to Index fund, for example, has When it comes to performance,
strengthen as investors become ongoing charges of 0.10 per cent the Vanguard LifeStrategy range
To find out more about Schroders retirement solutions, speak to
more cost-conscious and – but this would mean the investor stands up relatively well against
your financial adviser or visit schroders.co.uk/retirement for your
luminaries such as Warren Buffett misses out on a key feature of the its active peers – although past
chance to win a dream holiday. advocate the strategy. LifeStrategy range. returns are no guide to future
The latest figures from the Each of the funds in the performance.
Investment Association show range automatically rebalances Since launch in June 2011,
EPERFEC
that 11.3 per cent of the money to remain within its set asset every one of the five funds has
UR in open-ended funds is now in allocation and ensure the investor returned more than its average
passive vehicles, up from just is not exposed to more or less risk peer, with all aside from Vanguard
T
T
#PIC
WIN
under 10 per cent one year earlier. than they planned to be. LifeStrategy 100% Equity sitting in
Investors are now less likely While there is nothing to stop an their sector’s first quintile. In all
to see themselves as being in investor doing this on their own cases, these returns have come
Y
OLIDA either the active or passive camp with individual funds, outsourcing with lower annualised volatility
CT
A H and have more willingness to the move prevents them from than the average peer.
PI embrace both approaches where making a common mistake –
FE
#
CT R appropriate. Trackers allow chasing returns by moving into MANAGEMENT GROUP: Vanguard
UREPE investors to take broad exposure and out of the best and worst Asset Management
to markets at minimal cost, while performing sectors based upon LAUNCH DATE: 23 June 2011
SECTORS: IA Global, Mixed
active funds offer the chance to recent past performance. Investment 40%-85% Shares, Mixed
Luxury Cruise • Wine Country California generate market-beating returns, What’s more, investors can Investment 20%-60% Shares and
but at a price. simply switch between funds Mixed Investment 0%-35% Shares
Tee off in Dubai • Marvellous Mauritius One option that is designed within the range as they move OCF: 0.24%
COMBINED ASSETS UNDER
to complement an investor’s closer to their retirement age, MANAGEMENT: £1.86bn
risk profile and that could be a rather than having to figure out a
good option for anyone saving
for retirement is the Vanguard
LifeStrategy fund range, which
is built using the firm’s highly Performance since launch
respected underlying passives. 60%
Vanguard - LifeStrategy 100% Equity (50.60%)
As the name suggests, Vanguard 50%
Vanguard - LifeStrategy 60% Equity (42.51%)
LifeStrategy 100% Equity is fully 40%
invested in global stock markets Vanguard - LifeStrategy 20% Equity (32.51%)
30%
and is aimed at investors with a
20%
long time horizon and a strong
appetite for risk. The funds in 10%
the range move incrementally 0%
away from stocks and into bonds, -10%
ending with the lowest risk -20%
Investing for offering – Vanguard LifeStrategy
Jul 11
Oct
Jan 12
Apr
Apr
Oct
Jan 13
Apr
Jul
Oct
Jan 14
Apr
Jul
Oct
Jan 15
Apr
20% Equity.
your world The ongoing charges figure is
just 0.24 per cent for each of the Source: FE Analytics
The prize draw closes at midnight on 30/04/2015. Entry is limited to one per person and all entrants must be 18
or over. Full terms and conditions can be found on the competition page at www.schroders.co.uk/retirement.
This prize draw is free to enter and no investment into or purchase of any Schroder product is necessary to trustnet.com 15
enter. Issued in April 2015 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered
No: 4191730 England. Authorised and regulated by the Financial Conduct Authority. UK08643
INVESTMENT STRATEGY FIXED INCOME FUNDS
The mean return of the sector over
THERE ARE three and five years is 24.7 per cent
E CT O R CURRENTLY 92 and 38.6 per cent, respectively; again,
S IA STERLING none of its funds sits in negative
RO FIL E CORPORATE BOND
territory over either time period.
P FUNDS TO CHOOSE
FROM. STRIKINGLY,
HIGH YIELD BOND
As their name suggests, high yield
bonds tend to produce a much
NOT ONE FUND IN higher level of income than their
investment grade counterparts, but
THE SECTOR HAS this also comes with an increased
LOST MONEY OVER level of risk.
ONE YEAR Hasler notes there are two main
risks to investing in this sector:
default risk and capital volatility.
She says the first of these can be
mitigated by buying a fund run
by a trusted manager who avoids
securities threatened by this
scenario and who diversifies the
risk further by buying a variety of
bonds. However, she warns that
while the fund manager can to an
extent manage the increased level
of capital volatility expected from
BOND
these instruments, it is the price an
investor has to pay for a higher level
of income.
Returns have also been a lot less
secure than those from corporate
bonds. The average fund in the
sector is up only 1.5 per cent over
one year, with several of the 32
BOMBSHELL
constituents posting capital losses.
The average return jumps to 21.7
and 35.3 per cent over three and
five years respectively, meaning
the sector has underperformed its
Corporate Bond counterpart over all
time periods.
With interest rate rises imminent, selecting the right fixed income fund for your needs can STRATEGIC BOND
STERLING CORPORATE BOND can produce while maintaining the The IA Sterling Strategic Bond sector
be like navigating a minefield, writes Adam Lewis This sector was traditionally used to capital value of the investment? is sometimes seen as the multi-asset
generate income. It still fulfils this For many, the type of income will version of all the bond types on
W
ith choices to be made and the key to negotiating this years of record low interest rates purpose, but with interest rates and matter far more than the absolute offer. However, while this allows for
regarding interest minefield is focusing on which one and low yields have challenged yields so low, the payouts are not level,” she explained. plenty of choice, it also presents a
rate risk, credit risk, suits your objectives. the status quo, with the strong as attractive as they once were. As There are currently 92 IA Sterling challenge for anyone who is not a
currencies and regions, not to Gilts would rank as the safest performance of gilts catching out such, Square Mile’s head of research Corporate Bond funds to choose fixed income expert.
mention the debate thrown in normal market conditions, many experts in the past couple of Victoria Hasler says investors from. Strikingly, not one has lost The flexibility afforded to
up by the current tumultuous followed by investment grade years. should ascertain the type of income money over one year, with the worst, strategic bond managers has made it
geopolitical climate, investing in corporate bonds, strategic bonds Yet Cockerill says rate rises are each fund in this sector produces L&G Short Dated Sterling Corporate Cockerill’s current sector of choice.
fixed income is at best complex and high yield. coming. With this in mind, it is and find one that best suits their Bond Index, up 2.9 per cent. The He says: “We are cautious on the
and at worst a minefield. However, as Tim Cockerill, head worth considering the dynamics of needs. best, Schroder Long Dated Corporate whole fixed income sector right
There are four main fund-types of collectives at Rowan Dartington, each of the main sectors and how “For example, does the fund Bond, returned 20.2 per cent over the now and if we were looking to buy
on offer – corporate bond, high points out, we are not living in they are set to perform with an target a certain amount of income same period. The average fund is up the asset class, it would be strategic
yield, strategic bond and gilts – normal market conditions. Six inflection point on the horizon. or does it maximise the income it 10.2 per cent. bonds. The flexibility these funds
16 trustnet.com trustnet.com 17INVESTMENT STRATEGY FIXED INCOME FUNDS
R
SECTO E
PROFIL give, especially around duration, yield bonds, sell off. “As such they and income from the effects of
provides investors with the best
“FUNDS WILL VARY IN would perhaps best be viewed as inflation. While this is not an issue
chance of preserving capital.” THE LEVEL AND TYPE an insurance policy in the current worrying investors right now, Hasler
Taking the example of duration, OF RISK THEY PRESENT environment,” she said. notes they “could do worse than
the average of the Strategic Bond Index-linked gilts have the simple have some inflation protection in
and High Yield sectors is five years, AND INVESTORS SHOULD aim of protecting investors’ capital their portfolios”.
compared with 12 years for gilts. BEAR THIS IN MIND”
If the expected bond sell-off
occurs, the shorter duration funds
will perform best; corporate bond Performance over 3yrs
25%
funds are more limited in their of money flooding into the system
M&C - Glogal High Yield Bond (22.38%)
duration flexibility. via quantitative easing mean they 20%
While Hasler notes the Strategic have been anything but in recent IA Sterling High Tield (22.02%)
Bond sector offers something for years. 15%
everyone, she warns that investors Cockerill says the 10 to 12 per
have to focus on the outcome the cent drop in returns from 50-to- 10%
manager is seeking to achieve rather 55-year gilts in a short period
than the underlying investments in of time is an illustration of this 5%
the fund. risk and shows how artificial the
“Funds will vary in the level market has become. 0%
and type of risk they present and However, Hasler says gilts can
-5%
investors should bear this in mind,” still be useful in portfolios as they
Apr 12
Jul
Oct
Jan 13
Apr
Jul
Oct
Jan 14
Apr
Jul
Oct
Jan15
she says. are “risk off” investments and
The Strategic Bond sector tend to do well when other asset
has performed similarly to the classes, such as equities and high Source: FE Analytics
Corporate Bond and High Yield Bond
sectors over three and five years,
returning 21.6 per cent and 35.1 per
Bonds for all
cent respectively. Just two of the 71
funds in the sector have lost money
over one year, while the average
fund made 6.1 per cent.
IF THE EXPECTED THE CAUTIOUS Corporate Bond sector in Cockerill’s choice. managers Stefan Isaacs
GILTS AND INDEX FUND: BLACKROCK over three years and in the While he is an admirer of and James Tomlins’ fairly
BOND SELL-OFF LINKED GILTS CORPORATE BOND third quartile over one. Woolnough, for him the defensive positioning.
OCCURS, THE SHORTER Gilts were traditionally regarded This fund, managed by £24.5bn size of the M&G Cockerill says that despite
as low risk investments. However, Ben Edwards and Simon THE MEDIUM-RISK Optimal Income fund is the fact it has a strong
DURATION FUNDS WILL low yields, record low interest Blundell, currently FUND: HENDERSON an issue, especially with yield of about 5 per cent, it
PERFORM BEST rates and a considerable amount yields 3.8 per cent. STRATEGIC BOND his prediction of a bond achieves this while taking
However it is the fund’s Despite the presence sell-off on the horizon. on less risk. It is currently
£400m size that makes of the award-winning Henderson Strategic ranked second quartile in
it most appealing for Richard Woolnough in the Bond is yielding 5 per its sector over both one
Performance over 3yrs Cockerill. “This is a Strategic Bond sector, cent. and three years. It has
30% BlackRock - Corporate Bond (26.61%) well-run mainstream Cockerill plumps for three FE Crowns and is
fund that does not the Henderson duo of THE HIGH-RISK FUND: £1.2bn in size.
25% IA Sterling Corporate Bond (24.64%)
look to do anything too John Pattullo and Jenna M&G GLOBAL HIGH
20% clever,” he said. Barnard for his pick of YIELD
“However, versus the the medium-risk choices Although Cockerill does
15%
bigger funds in the peer within fixed income. not hold this fund at
10% group which struggle He describes this as “a the moment, it is
during big sell-offs, the proper strategic bond his high yield
5%
fund’s size allows the team fund” owing to the way the fund of choice.
0% to quickly make changes managers alter duration He says it
to the portfolio, such as and the fact they “are not is more
-5%
selling out of a position.” afraid to make decisions cautious
Apr 12
Jul
Oct
Jan 13
Apr
Jul
Oct
Jan 14
Apr
Jul
Oct
Jan 15
The two crown-rated based on what is going than its
fund sits in the second on in the market place”. peers
Source: FE Analytics quartile of the IA Sterling Size again played a part owing to
18 trustnet.com trustnet.com 19INVESTMENT STRATEGY SCHRODERS
INCOME
THE LONGER YOU INVEST Don’t ignore the need for
retirement income
FOR, THE GREATER THE “I’m not worried about
POTENTIAL FOR YOUR providing for my retirement –
the state will look after me.”
MONEY TO GROW AND
MATTERS
THE MORE YOU COULD Responsibility for financial security
BENEFIT FROM THE in retirement is falling more heavily
on individuals and this trend is
POWERFUL EFFECT OF likely to continue.
“GROWTH ON GROWTH”
Be open-minded when
considering income solutions
While some of your expenses may “I am only comfortable
Funding retirement and fall when you stop working, the
retirement years could bring greater
investing in companies or
industries I am familiar with.”
spending on utilities and healthcare,
supporting life-long goals among other things. Aim for an income solution
that’s truly appropriate for your
Begin by making a plan circumstances, objectives, risk
“Is the same income plan fit for attitudes and capacity for loss, rather
all purposes?” than simply sticking to what you’re
familiar with. Considering a broad
It may be appropriate to have range of investments can help you
different income plans for different to reduce risk and increase your
purposes. You may, for example, be chances of achieving your objectives.
happy to accept a greater degree
of risk in an income plan designed Get advice if you need it
to help you with “nice-to-haves” “I don’t understand the options.”
such as foreign holidays or home
improvements than for “must- An independent financial adviser
haves” such as day-to-day living can explain all your options
expenses in retirement or college and help you make the best
fees for your children. decision based on your individual
Schroders recommends a number of steps for you to follow at every stage of your life circumstances. If you do not
that can help you to achieve your income goals when you reach retirement Start saving as soon as you can currently have a financial adviser,
GETTING STARTED “What’s the benefit of starting one option is to search for a local
Here are some tips to help you to save early?” adviser at www.unbiased.com. You
I
nvesting for income can play increase the statutory state provision to save for their own achieve your income investing may also find it useful to visit www.
an important role in helping pension age. But in the view of retirement. objectives throughout your life. The longer you invest for, the greater vouchedfor.co.uk, where members
you to achieve your goals at the Organisation for Economic the potential for your money to of the public rate and review
any stage in life, from funding a Co-operation and Development STATE PENSION Work out what you need to grow and the more you could advisers they have used.
business start-up to supporting (OECD), this alone may not When the UK contributory state achieve and set clear objectives benefit from the powerful effect
children through their higher ensure the affordability of the pension was introduced in 1948, “I don’t know how much I need of “growth on growth”, known Please remember, the value of
education. It is in helping to public pension system. To make the average man lived less than to save.” as compounding. Assuming investments and the income
fund your retirement, however, up for a potential fall in the level 12 months beyond the retirement investment growth of 4 per cent per from them may go down as well
that an income plan is likely to of public benefits, it proposes age of 65. By 2013, that figure had Your savings objectives should annum, an investment of £1,000 at as up and investors may not get
play the most important role. that people should make some jumped to 18 years. reflect the aims of your income plan. the age of 30 would be worth £3,950 back the amounts originally
Healthier lifestyles and If you want a reasonable standard by the time you reach 65. invested.
medical advances mean many of living in retirement, for example,
of us will live for longer than STATE PENSION AGE FOR MEN AND WOMEN a useful rule is to save enough to
previous generations. However, provide an income of between half For more information on income investments for retirement
Current 65
this creates a significant and two-thirds of your final salary. from Schroders, visit Schroders.co.uk/retirement
challenge – how to fund a Between November 2018 and October 2020 66
fulfilling life beyond our Between 2026 and 2028 67
working years. Important information: This article is intended to be for information purposes only and it is not intended as promotional material in any respect. This article is not intended as an offer or solicitation for the
The UK, along with many Beyond 2028 Reviewed every 5 years and rising in line with life expentancy purchase or sale of any financial instrument. Schroders has expressed its own views and opinions in this article and these may change. This article is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this article when taking individual investment and/or strategic decisions.
other countries, plans to Source: ONS Issued in April 2015 by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority. UK09123
20 trustnet.com trustnet.com 21IN THE BACK
PLATFORMS
QUICK ON THE
UNTIL FAIRLY RECENTLY,
PENSIONS WERE DARK,
MYSTERIOUS THINGS
DRAWDOWN
THAT WE PAID INTO
UNTIL WE RETIRED AND
RECEIVED AN AMOUNT
OF MONEY BACK AGAIN
You wouldn’t let the government tell you how to spend your salary, so why let them retirees have faced a crash at the
point of retirement when they have
do it with your pension? had to buy an annuity, so not having
to cash in your pot at a certain point
I
can’t remember a good idea from ended up being a career cul-de-sac. loving and cherishing of my cash seems to be a red herring.
any government that has come to Some of these pensions are when I retire. I can keep managing Most investors have seen their
fruition quite so quickly. reasonable and some are just a few it and take out money as and when portfolio rise and fall in the
I can remember some bad ideas thousand pounds. But one thing I need it. Just like I do now in fact, accumulation phase so it is sensible
that were introduced fast and some they all have in common is that while I am in gainful employment. to assume it will happen while you
good ideas that never happened, none of them promises the faintest And because I don’t give away all are decumulating.
but George Osborne’s “pension hope of me walking hand-in-hand of my retirement pot to the annuity Then there’s the elephant in the
freedoms” plan is here already. with my lovely wife down a sandy company at 65 (or whenever) in room – when will you actually
And it really is a good idea. Can Caribbean beach at sunset (in exchange for a fixed income for die?
you imagine if your employer, or the obligatory white clothes), grey life, I have some flexibility. If I don’t
government, told you how to spend hair blowing in the warm breeze – need any money, I can leave my
your salary? We would rise up in despite what you see on the cover investments working. If I need a
rebellion. So why, until a few weeks of all those Saga-style annuity Lamborghini, I can buy one. In fact I MONTHLY INCOME OF AN ANNUITY VS. DRAWDOWN
ago, were there strict controls over brochures. Bognor would be a can do the same things I do now.
how we accessed our pension pots? struggle. In November. 3,000 Annuity rate
I suspect the answer comes in RETIREMENT PLANNER Drawdown
two parts. The financial services LURCHING ALONG We are building a retirement 3,000
industry is a powerful thing and In isolation, each pension was planner for Trustnet Direct: I have
3,000
the way insurers thrived on the lurching slowly along, weighed used the prototype to calculate
“annuitisation” of people’s pension back by hefty charges and invested a scenario looking at income in
3,000
savings was somewhat self-serving in pension funds I hadn’t heard of. retirement from drawdown versus
and highly profitable. Until recently, What I did with these almost some online annuity quotes. So I
3,000
pensions were mysterious things forgotten pensions was repatriated looked at arriving at retirement
we paid into until we retired and them – into my SIPP – put them with a range of different amounts,
3,000
received some money back again. all together and invested them in from £75,000 through to £1m
funds that are highly regarded and and wanted to see what monthly
2,000
GENEROUS SCHEMES consistent in their performance. income it would give me. It isn’t
Some lucky people had final salary I’ll not give away my nest egg’s scientific, but makes some sense. If
1,000
pensions, which were so generous value, but in the 18 months I have annuity providers have to budget to
they had the ability to sink the huge cherished the money from these provide a defined income for as long
0
companies that offered them. Those pensions in one place, it has risen by as you live – and we’re all living £75,000 £100,000 £250,000 £500,000 £750,000 £1,000,000
pensions are as rare as a French faux- 30 per cent. Combining low charges longer – they may feel like hedging
filet now, so most of us have to use and better performing funds has had their bets (as actuaries do). PENSION POT AT RETIREMENT AGED 65
our loaf to cobble together a decent a big impact.
retirement pot. If I keep investing each month TOO GOOD TO BE TRUE £75,000 £100,000 £250,000 £500,000 £750,000 £1,000,000
Take me, for example, as a typical as I’m doing, with me and my With these assumptions, drawdown Annuity rate 308 418 1,046 1,882 3,039 4,053
child of Thatcher’s Britain. I’ve company paying into my SIPP, I’m looks almost too good to be true, in Drawdown 560 750 1,900 3,800 5,700 7,600
worked for several companies, in looking at an entirely different which case it may be. What happens Assumptions: Bar charts show monthly income in retirement at 65 years old. Annuity rates
good times and bad. I’ve got a few retirement scenario than the one I if your investments plummet during courtesy of Saga website, 15/03/2015. Standard annuity rates quoted, as opposed to enhanced
pensions, some from short stints at was facing just four years ago. retirement? Crashes have happened annuity. Drawdown assumptions are that non-drawn down money remains invested and grows at
8 per cent per annum net of all fees, taxes and charges. Lastly, we assume that your drawdown
companies where the career path Better still, I don’t need to stop the regularly over the last century. Many pension pot will be exhausted at 90 years old. State pension not included in either figure.
22 trustnet.com trustnet.com 23You can also read
