Select Risk Profile Portfolios quarterly investment report

Transcription

1 For financial advisers Select Risk Profile Portfolios quarterly investment report Quarter three 2017

2 Contents About the Select Risk Profile Portfolios 3 Market review quarter three Fund performance 6 Adventurous 7 Growth Plus 8 Growth 9 Balanced Plus 10 Balanced 11 Cautious 12 Select Sector Portfolio asset allocation 13 Important information 14 The information contained in this report constitutes a factual review of performance only and is correct as at 30 September It shouldn t be taken as a recommendation or advice. This communication is for inancial advisers only. It mustn t be distributed to, or relied on by, customers. There s no guarantee that fund objectives will be met. The value of an investment may go down as well as up and investors may get back less than originally invested. Page 2 of 14

3 About the Select Risk Profile Portfolios There are six funds in the Select Risk Proile Portfolio range. Each targets a diferent level of risk, ranging from 'below' to 'above average'. The volatility ranges that each portfolio targets are shown in brackets in the diagram below. Adventurous (16% - 18%) Growth Plus (14% - 16%) Growth (12% - 14%) Balanced Plus (10% - 12%) Balanced (8% - 10%) Cautious (6% - 8%) We ve employed independent consultant Morningstar Investment Management Europe Limited (Morningstar) to help us build and manage these portfolios. Morningstar takes strategic and tactical asset allocation decisions to help the portfolios meet their two primary objectives, which are: to keep within targeted risk ranges over a market cycle, and to deliver the best possible performance for the amount of risk taken. To meet these objectives, Morningstar regularly reviews the portfolios and recommends changes where this is necessary. However, there s no guarantee that the funds will meet their objectives. The risk ranges for each portfolio are measured using annualised standard deviation over a market cycle. Standard deviation measures the extent to which a fund s returns have historically deviated from its own average. The higher the percentage, the greater the risk (and, generally, the higher the potential returns). There's no guarantee the portfolios will sit within their target risk ranges. The asset allocation of each is based on long-term historical volatility data, which may not be repeated in the future. The Select Risk Proile Portfolios are built mainly, but not exclusively, from the funds in our Select Sector Portfolio range. The nine Select Sector Portfolios are made up of what we believe to be the best blend of funds in their sector, many of which are rated by Morningstar Inc. The value of these investments can fall as well as rise for a number of reasons; for example, market and currency movements. Your clients may get back less than originally invested. For more information on how our Select Risk Profile Portfolios work and how to use them, please visit our website at Page 3 of 14

4 Market review quarter three 2017 Despite a turbulent quarter, led by environmental crisis, elections and global political tensions, major markets rallied to deliver a broadly positive performance. News streams were dominated by an ongoing war of words between US President Donald Trump and North Korea s Kim Jong-un. Markets were initially cautious following Pyongyang s provocative missile test launch over Japanese territory, with resultant gains for safe-haven investments, such as the yen and gold. Against this backdrop, Emerging markets came out in front as they edged towards one of their best years on record, helped partly by a weak US dollar and rising commodity prices. European markets followed closely behind, continuing on the highs of last quarter, despite an unexpected election result in Germany and sustained uncertainty surrounding the UK-EU Brexit negotiations. In the UK, markets also continued to feel the weight of Brexit-related tensions: UK government bonds sufered over the period in line with hints of tightening monetary policy from the Bank of England (BoE), while UK corporate bonds and UK equities made modest gains as BoE governor Mark Carney pointed towards a November interest-rate rise. US equities made gains with the S&P 500 TR Index rising to heights not seen since April this year as the Federal Reserve (The Fed) announced plans to increase interest rates in spite of an economy left shaken by hurricanes Harvey and Irma. In Japan, the Topix remained around its two-year highs; climbing after Prime Minister Shinzo rushed to take advantage of positive opinion over his hard-line stance on North Korea. Asian markets posted modest returns, helped mainly by the encouraging economic news coming from China, despite rising tensions in the region Return FTSE AllSh TR GBP 3.6 FTSE World Eur Ex UK TR GBP S&P 500 TR GBP Topix TR JPY 0.2 FTSE World AP Ex JapanTR GBP 4.5 FTSE Emerging TR GBP FTSE Gilts All Stocks TR GBP Markit iboxx GBP NonGilts TR ICE LIBOR 1 Week GBP How did the major markets perform over 12 months? Equity markets continue to deliver strong returns in response to low-interest rates as investors turn to higher-risk asset classes. European equity markets remain ahead, closely followed by Emerging markets. US equities rose to new heights despite a turbulent year dominated by internal political tensions, geo-political disputes and environmental crisis. Asia Paciic and Japan continued their steady gains as economic growth forecasts remain positive. Meanwhile, continued tensions surrounding the UK-EU Brexit negotiations combined with low-interest rates have led to a weak performance from UK gilts, UK Corporate bonds and cash Return FTSE AllSh TR GBP FTSE World Eur Ex UK TR GBP S&P 500 TR GBP Topix TR JPY FTSE World AP Ex JapanTR GBP FTSE Emerging TR GBP FTSE Gilts All Stocks TR GBP Markit iboxx GBP NonGilts TR ICE LIBOR 1 Week GBP UK Europe ex UK USA Japan Asia Pacific Emerging Markets UK Gilts UK Corporate Bonds Cash Source: Morningstar Direct, produced by Aegon. Charts compiled using total return indices to 30 September Figures in sterling so include the efect of currency luctuations. Past performance is no guide to future performance. Page 4 of 14

5 What were the key events in the major markets in quarter three? Here s a round-up of some of the key events that shaped the investment returns we ve seen across the major markets. This quarter, the UK remained overshadowed by investor uncertainties with Brexit at its core. The government issued a number of papers early in the quarter setting out its negotiating position on the UK's withdrawal from the EU. Figures released during the quarter showed the UK economy had grown as expected over Q2 as gross domestic product (GDP) grew by 0.3%. Negative sentiment towards the UK economy was relected in weak sterling, with the pound falling against the euro to its lowest levels in eight years. It subsequently surged more than 1% to a 12-month high following the Bank of England s announcement that UK interest rates will remain on hold. The US economy initially faced market jitters as investors wavered away from the dollar for other currencies in response to geopolitical tensions between the US and North Korea. Yet, they soon rebounded at the unveiling of President Trump s tax reform and infrastructure spending campaign pledges and as Hurricane Irma's impact on mainland US was less devastating than expected. Markets were further boosted as controversial Trump adviser Steve Bannon resigned from his post in the White House. Meanwhile, GDP igures released in Q3 revealed the US economy had grown at the fastest pace in two years. Europe continued on the upside, as igures released during the quarter showed unemployment across the eurozone had fallen to 9.1% and GDP continued to grow up from 0.5% in Q1 to 0.6% in Q2. In Germany, Angela Merkel won a fourth term as German Chancellor despite a surge in support for far-right party the Alternative for Germany (AfD) party.. Meanwhile, the euro-area currency reached an 8-year high versus sterling over the quarter, at an annualised rate of 3%. The Japanese economy remained robust over the quarter as igures released showed GDP had grown over Q2 at the fastest pace in over two years, rising by 4%, well above the expected 2.5% forecasts. This came despite a period of intense geo-political uncertainty at the hands of North Korea s provocative missile testing in the Japanese waters. The yen, a safe-haven asset, strengthened over the quarter as a result. Japan s Prime Minister, Shinzo Abe, called for a snap election, hoping to beneit from positive public opinion in the wake of the North Korean crisis. China s economy led the way in the Asia-Paciic region with igures released over the quarter revealing GDP had grown by 6.9% between April and June, way ahead of estimates. Elsewhere, Indian GDP fell to 5.7% for Q2, down from 6.1% in Q1. South Korea took the baton as one of Asia s stand-out market regions with their dominance of the technology sector. In Emerging markets interest rates were cut across a number of countries most notably with Brazil s central bank cutting rates by 2% over the quarter to 8.25%. This was the irst time rates had fallen below 10% in over four years. Rates cuts were also seen in Colombia and Peru. Elsewhere, igures released over the period revealed Russian GDP was up 2.5% between April and June, ahead of initial estimates of 1.7%. This came amid rising oil prices and a weak US dollar. In South Africa, President Jacob Zuma survived a vote of no conidence amid allegations of corruption. Fixed income: Fed Chair Janet Yellen began the quarter by announcing that the central bank may not need to raise interest rates and ended the quarter by revealing an intention to unwind the program of economic stimulus by selling of $4.5 trillion dollars worth of bonds. Elsewhere, European Central Bank (ECB) chairman, Mario Draghi hinted early in the quarter that the central bank may begin to reduce its programme of economic stimulus, however geo-political issues later in the quarter led to the ECB stance remaining unchanged. Page 5 of 14

6 Fund performance Fund 3 months Year to date 1 year 3 years 5 years Adventurous Growth Plus Growth Balanced Plus Balanced Cautious Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. The chart below shows the target risk/volatility ranges for each portfolio (the blue bands), expressed in standard deviation terms, and the orange circles show the actual level of volatility. Three year annualised volatility, to end September 2017 Three year annualised volatility Cautious Balanced Balanced Plus Growth Growth Plus Adventurous Portfolio risk range Portfolio volatility Source: Morningstar Direct by Aegon. Figures show annualised volatility from 30 September 2014 to 30 September Past performance is no guide to future performance. Each Select Risk Proile Portfolio has a target risk range that it aims to meet over a market cycle, which can last three years or more. Currently, each of the portfolios is lagging behind its respective target risk range. The Select Risk Proile Portfolios are created based on long-term market analysis, so when market risk is lower than average, we would expect to see the portfolios fall below their target risk range. Currently, market volatility is lower than average in most sectors, especially those traditionally considered higher risk, like equities (shares). This is relected in the volatility of the Select Risk Proile Portfolios but is even more pronounced at the higher end of the risk spectrum the Adventurous is lagging further behind its target risk range than the less-risky portfolios. These target risk ranges may be met by increasing exposure to riskier markets in each portfolio. We believe, however, that investors are best served by a diversiied portfolio that matches their individual risk proile over the longer term, as opposed to chasing market risk in periods of low volatility. For example, currently the Adventurous would have to be 100% invested in global emerging markets to get just within its 16-18% target risk range. As market volatility returns to normal levels, we expect the Select Risk Proile Portfolios to close the gap on their target risk ranges. Whether market volatility is high or low, the ranges will ofer what we believe is a suitable level of risk and suitably diversiied asset allocation. Page 6 of 14

7 Adventurous This fund aims to provide long-term capital growth while keeping risk in a target volatility range of 16% 18% over a market cycle, which can last three years or more. Morningstar helps us select and manage the blend of funds it contains. Fund 3 months 1 year 3 years Adventurous UK Equity North American Equity Global Emerging Markets Equity European Equity Japan Equity Asian Equity Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 30 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the components of the Adventurous Select Portfolio as at 30 September However, these can change and the performance of the Adventurous takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Adventurous returned 1.8% over a quarter dominated by environmental crisis, elections and global political tensions. Every holding in the fund delivered positive gains this quarter, with the fund s largest holding in the UK Equity (36.5% of assets) delivering a return of 2.1%, despite continued uncertainty surrounding the UK-EU Brexit negotiations. The second largest holding in the North American Equity (17.4% of assets) gave a more muted performance as the region was left shaken by both environmental and political hurricanes; Harvey and Irma and the US President and North Korea s Kim Jong-un. Emerging markets was the top performer for the portfolio rising by 2.9% over the quarter as the asset class heads towards one of its best years on record. European markets followed closely behind, delivering 2.2% as GDP continues to grow and unemployment continues to fall across the eurozone. Asian and Japanese equities both delivered a more modest market performance over the quarter, despite rising tensions in the region. Asset allocation at end September % 11.9% 12.4% 14.4% 17.4% 36.5% UK Equity North American Equity Global Emerging Markets Equity European Equity Japan Equity Asian Equity The igures above may not add up to exactly 100% due to rounding. Page 7 of 14

8 Growth Plus The fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 14%-16% over a market cycle. Morningstar helps us select and manage the blend of funds it contains. Fund 3 months 1 year 3 years Growth Plus UK Equity North American Equity European Equity Global Emerging Markets Equity Japan Equity Asian Equity Property UK Corporate Bond International Bond Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 30 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the components of the Growth Plus as at 30 September However, these can change and the performance of the Growth Plus takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Growth Plus returned 1.6% over the quarter. The top holding in the fund, the UK Equity Select Portfolio (36.4% of assets) performed well, delivering a return of 2.1% over the quarter. UK equities made muted gains as BoE Governor Mark Carney made reference to a possible interest-rate rise in November, despite a period of continued turbulent debate over Brexit negotiations with the European Union. European Equities continued on the upside with a return of 2.2%. US equity markets faced market instability early in the quarter as investors cautiously responded to the ongoing war-of-words between the US president and his North Korean counterpart. International bonds had a challenging quarter, as gilts, cash and bonds sufered at the hands of the persistently low-interest rate environment and the potential for a number of central banks to make changes to current monetary policy. The Global Emerging Markets Equity was the stand out performer, making a gain of 2.9% over the period. Whereas, Japanese and Asian equities, making up the smaller percentage of the holding, delivered positive, but muted returns. Asset allocation at end September % 3.4% 4.2% 5.4% UK Equity Asian Equity 10.2% 11.6% 11.6% 13.9% 36.4% North American Equity European Equity Global Emerging Markets Equity Japan Equity Property UK Corporate Bond International Bond The igures above may not add up to exactly 100% due to rounding. Page 8 of 14

9 Growth The fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 12%-14% over a market cycle. Morningstar helps us select and manage the blend of funds it contains. Fund 1.6% 2.4% 4.5% UK Equity 6.0% 6.1% 8.7% 4.8% 9.4% 10.9% 12.3% 33.3% North American Equity European Equity Japan Equity 3 months Global Emerging Markets Equity UK Corporate Bond 1 year Property International Bond Asian Equity Cash UK Gilts All Stock Tracker 3 years Growth UK Equity North American Equity European Equity Japan Equity Global Emerging Markets Equity UK Corporate Bond Property International Bond Asian Equity UK Gilts All Stock Tracker Cash Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 6 June Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the current components of the Growth Select Portfolio as at 30 September However, these can change and the performance of the Growth takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Growth delivered a positive return of 1.4% over quarter three. The UK Equity, which forms the majority of the portfolio s holdings, returned 2.1%, as UK equities made gains despite a period of continued EU-UK Brexit tensions and a weakened sterling. US Equities also performed well in spite of a turbulent quarter, with building tensions between North Korea, controversial resignations at the White House, and the impending threat of two hurricanes. Europe continued as a top performer for the portfolio, with the European Equity making gains of 2.2% in line with further GDP growth and falling unemployment in the region. Yet Emerging markets took the trophy for the quarter, delivering gains of 2.9%, as it beneitted from a weak US dollar and rising commodity prices, while Japanese markets delivered more muted returns. As a result of the prolonged period of lowered-interest rates, the UK Corporate Bond, UK Gilts All Stock Tracker, International Bond and Cash fund all delivered slightly negative returns. Asset allocation at end September 2017 The igures above may not add up to exactly 100% due to rounding. Page 9 of 14

10 Balanced Plus The fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 10%-12% over a market cycle. Morningstar helps us select and manage the blend of funds it holds. Fund 3 months 1 year 3 years Balanced Plus UK Equity UK Corporate Bond North American Equity International Bond European Equity Japan Equity Global Emerging Markets Equity Property Index Linked Asian Equity UK Gilts All Stock Tracker Cash Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 30 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the components of the Balanced Plus Select Portfolio as at 30 September However, these can change and the performance of the Balanced Plus takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Balanced Plus delivered a positive return of 1.0%. As the portfolio s most signiicant weighting is in the UK Equity (27.0% of assets), it beneitted from the positive performance of UK equities in the midst of a period of continued political uncertainty around Brexit negotiations. US equities also made gains, albeit modest this quarter, as markets rose in response to the Federal Reserve (the Fed) revealing plans to increase interest rates. The persistently low-interest rate environment led to a weak performance for the UK Corporate Bond Select Portfolio and International Bond, as well as the portfolio s smaller allocations in gilts and cash. European equities continued on the upside, but emerging markets took the title of top performer, delivering 2.9% gains as it took advantage of a weak US dollar and rising commodity prices. A positive quarter for Asian markets saw encouraging returns for the fund s Japanese and Asian equity holdings. The Property also made gains this quarter. Asset allocation at end September % 2.1% 3.8% 5.9% 4.9% 27.0% UK Equity UK Corporate Bond Global Emerging Markets Equity 7.2% North American Equity International Bond Property Index Linked 7.2% 9.2% 9.8% 10.1% 10.9% European Equity Japan Equity Asian Equity UK Gilts All Stock Tracker Cash The igures above may not add up to exactly 100% due to rounding. Page 10 of 14

11 Balanced The fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 10%-12% over a market cycle. Morningstar helps us select and manage the blend of funds it holds. Fund 3 months 1 year 3 years Balanced UK Equity UK Corporate Bond International Bond North American Equity European Equity Global Emerging Markets Equity Japan Equity UK Gilts All Stock Tracker Property Index Linked Cash Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 30 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the components of the Balanced as at 30 September However, these can change and the performance of the Balanced takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Balanced delivered a positive return of 0.8% over the quarter. UK equities performed well, in spite of continued uncertainties surrounding UK-EU Brexit negotiations, with the UK Equity delivering a robust 2.1% return. Yet, it was a less promising quarter for the UK Corporate Bond, which gave a more modest performance due to the low-interest rate environment and rumours that a number of central banks were contemplating changes to monetary policy. International bonds, gilts and cash also sufered negative returns as a result. US equities made gains in the face of an economy initially left shaken by hurricanes Harvey and Irma. European equities continued on the highs of last quarter, returning a solid 2.2% as the region beneitted from expanding economic activity and falling unemployment. The strongest returns however, came from the Global Emerging Markets Equity ; edging out in front on the back of a weak US dollar and increasing commodity prices. Asset allocation at end September % 5.0% 5.0% 6.2% 6.4% 24.8% UK Equity UK Corporate Bond International Bond North American Equity Japan Equity UK Gilts All Stock Tracker Property Index Linked 6.7% 8.3% 8.4% 10.1% 15.4% European Equity Global Emerging Markets Equity Cash The igures above may not add up to exactly 100% due to rounding. Page 11 of 14

12 Cautious The fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 6%-8% over a market cycle. Morningstar helps us select and manage the blend of funds it contains. Fund 3 months 1 year 3 years Cautious UK Corporate Bond UK Equity International Bond UK Gilts All Stock Tracker Index Linked North American Equity European Equity Japan Equity Property Global Emerging Markets Equity Cash Source: Morningstar Direct. Produced by Aegon. Figures in s, bid-to-bid basis, net of charges, with gross income reinvested to 30 September Fund launched on 26 September Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested. Please note: the funds shown in italics are the components of the Cautious as at 30 September However, these can change and the performance of the Cautious takes these changes into account over the periods shown above. Fund commentary, quarter three 2017 The Cautious delivered 0.4% over a turbulent period, dominated by elections and global political tensions. The portfolio s holdings in bonds, gilts and cash all delivered muted or negative returns as they faced continued rates of low-interest and the potential for an end to quantitative easing over the quarter. The fund s largest holding in the UK Corporate Bond returned 0.3%, while the International Bond Select Portfolio delivered -1.5%, and the Index Linked and UK Gilts All Stock Tracker, -0.7%. UK equities gave a strong performance, returning 2.2% as the region beneitted from continued GDP growth. US markets boosted as a response to the Fed announcing plans to increase interest rates. European markets continued on the heights of last quarter as the quarter appreciated falling GDP and growing employment rates. Asset allocation at end September % 3.7% 18.6% UK Corporate Bond 3.8% UK Equity European Equity Japan Equity 4.5% International Bond Property 5.7% 6.8% 16.8% UK Gilts All Stock Tracker Index Linked Global Emerging Markets Equity 8.0% 9.4% 12.1% North American Equity Cash The igures above may not add up to exactly 100% due to rounding. Page 12 of 14

13 Select Sector Portfolio asset allocation (as at 30 September) The Select Risk Proile Portfolios are mainly made up from funds in our Select Sector Portfolio range. These are nine portfolios covering the major regions and asset classes and they re carefully selected from our range, on recommendations from Morningstar, as the best blend of funds in their respective sectors. The tables below show the current asset allocation of the Select Sector Portfolios that make up our Select Risk Proile Portfolio range. Asian Equity SE Investec Asia ex-japan 25.6 Paciic ex-japan Equity Tracker 23.9 SE Aberdeen Asia Paciic Equity 18.2 SE Fidelity South East Asia 16.3 SE Schroder Asian Alpha Plus 16.1 European Equity Continental European Equity Tracker 29.1 SE Schroder European Opportunities 19.9 SE BlackRock European Dynamic 19.3 SE Henderson European Select Opportunities 16.8 SE Jupiter European Special Situations 14.9 Global Emerging Markets Equity Emerging Markets Equity Tracker 24.8 SE Aberdeen Emerging Markets (blend) 17.3 SE Lazard Emerging Markets 16.5 SE JPM Emerging Markets 16.3 SE M&G Global Emerging Markets 14.3 SE Somerset Global Emerging Markets 10.8 International Bond Overseas Government Bond Tracker 33.7 SE Newton International Bond 27.3 Overseas Corporate Bond Tracker 20.3 SE Templeton Global Total Return Bond 18.6 Japanese Equity Japan Equity Tracker 38.9 SE Schroder Tokyo 25.2 SE Man GLG Japan Core Alpha 20.3 SE Jupiter Japan Income 15.5 Property SE M&G Property Portfolio 29.5 SE L&G UK Property 25.5 Property 20.4 SE Threadneedle UK Property 15.6 Aegon Active Value Property 9.0 North American Equity North American Equity Tracker 40.1 SE JPM US Equity 21.8 SE Schroder US Mid Cap 20.2 SE AXA Framlington American Growth 17.9 UK Corporate Bond SE Fidelity Money Builder Income 27.5 SE Kames Investment Grade Bond 25.2 SE M&G Strategic Corporate Bond 20.1 SE Royal London Corporate Bond 15.2 SE Henderson Strategic Bond 12.1 UK Equity UK Index Tracker 34.7 SE Artemis Income 14.8 SE AXA Framlington UK Select Opportunities 14.1 SE BlackRock UK Special Siuations 10.5 SE Threadneedle UK Equity Income 10.1 SE Artemis Special Situations 9.4 SE Old Mutual UK Smaller Companies 6.4 Page 13 of 14

14 Important information Please note we reserve the right to add, remove and replace funds within the Select Risk Proile Portfolios or alter weightings between funds with the aim of making sure they continue to meet their aims and objectives. This may afect the additional charges/ expenses we disclose for the portfolios. We reserve the right to change these without prior notiication. We ll announce any changes on the Fund changes and news' section of our website: Important information about property your client may not be able to cash in or switch out of any fund investing wholly or partly in direct property when they want to. We may have to delay your client s payment for up to 12 months if market conditions make it hard for the manager of the fund to sell properties at a fair price. Your client should also be aware that property funds can experience larger price movements (up or down) than other types of funds, either due to changes in valuations (which are a matter of an independent valuer s opinion rather than fact) or as a result of a change in the valuation basis. Aegon UK Aegon UK Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered oice: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No ). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number An Aegon company AEGON UK plc INV /17