How we select our investment options
In choosing the five simple investment choices that are available through our Drawdown service, we first identified five types of customer. These range from people who want the flexibility of pension drawdown without the investment risk typically associated with it to those who have the desire and means to accept a higher level of investment risk in order to pursue higher returns.
We next conducted a review of the investment market, selecting the fund ranges that we feel would be appropriate options for each of these five investor types. This review takes into account a number of different factors, all of which we feel are important for our customers, including:
The diversity of investments We sought funds that invest in a wide range of assets types and locations. This approach seeks to limit any negative impact that any one factor could have on the overall investment performance.
Experienced fund managers We identify firms with fund managers that have strong research teams and access to specialists within each investment sector.
The risks and returns When selecting the funds we offer, we reviewed the potential range of volatility (the size of the gains and falls over time) they may display. Volatility is one measure of the potential risk an investment fund presents. This means that we can help our customers to make informed choices on the level of investment risks that they are taking.
The fund charges We want to be sure that our customers are getting value for money, so we aim to offer funds with competitive and transparent management charges, thereby reducing the impact on the fund value.
Protection against losses One of our funds has an element of protection from falling investment markets, should you be concerned about the proportion of your fund you are willing to risk. However, this does not mean your fund is guaranteed.