Managed Funds in Fact sheet 6 February at 1:10PM in Pensions, annuities & retirement planning 2 replies 147 views

Pat38493

What does it mean if a percent of my pension is invested in "Managed Funds".

Example is "Aviva Pension MyM Mercer Growth / Balanced Risk" - 11.2% of this is invested in "Managed Funds" per the factsheet - does that mean equities or bonds or a mix?  I am trying to understand what percent equities my investments are actually in.

Also I'm a bit confused how the Aviva fact sheet describes the fund as "moderate to high risk" whereas the Morningstar describes it as "Lower risk".

I am thinking of maybe moving a portion of the fund into Global and US Index trackers - the selection of funds available to me on the Aviva Membersite is not that large at about 130, but there is a 30/70 UK/US Index tracker and a Blackrock US benchmark tracker available.

Thinking is to increase equity exposure to 80% overall.

I might actually need to move the entire fund out as they are going to move it into the relevant target year retirement fund in a couple of years which I don't think I want them to do.

Secret2ndAccount

I do not believe there is an exact definition either in law or in the industry. However, a managed fund is one where an individual, or group of people decide what to buy and when. They will state the fund's aims and policies, but the eventual decisions are down to the fund manager within those limits. A passive fund has a clear set of rules which determine the buying and selling - no-one gets to decide to deviate from the rules. Using Vanguard funds as an example:
VUSA  - Vanguard S&P 500   Tracks the performance of the US S&P500 by buying shares in equal proportions to the well known S&P 500 index.  That's a passive fund.
VLS100 - Lifestrategy 100  Invests 100% in equities. Vanguard chooses the stocks. They buy from all around the world, but lean a little towards UK stocks. You are relying on their choices - that's a managed fund.
VLS60     Is 60% stocks and 40% bonds (the stocks are exactly the same as VLS100). Also a managed fund.

So a managed fund can contain stocks and/or bonds (or property, or cash). Typically the charges (a small percentage deducted regularly from the fund) are higher for the managed funds.

Secret2ndAccount

To address the question of risk ratings, again, there is no standardisation at all across the industry. Some people take the view that any stock investment is volatile, and therefore risky. So they might treat a low risk global equity fund as a 4 out of 5, and a high risk tech fund as a 5/5. On the other hand, if you accept that the customer wants to invest in equities, then the diversified global index tracker becomes a 1 out of 5, i.e. it goes from risky to not very risky.