The Retirement Account Fund range and investment proposition For professional adviser use only
What is The Retirement Account? The Retirement Account (TRA) provides a unique 3-way solution that allows you to combine funds from well-known investment managers, protected fund options, and guaranteed income via an annuity all within one drawdown wrapper. Once a client transfers their pension pot(s) into TRA, they can choose to invest their money in: Pension Savings (uncrystallised) money can be invested until needed, allowing phased withdrawal of tax-free cash Pension Drawdown which allows for flexibility, accessibility and growth opportunities, and/or Guaranteed Annuity there is an option to take a tax-advantaged annuity element within the package, to provide guaranteed income, either at the point of retirement or at a later date. The Retirement Account offers a diverse range of funds conveniently graded by risk, so you can build a portfolio to suit most retirees with ease. The range includes active, passive and protected options, including a set of risk-targeted funds which consistently track a chosen Dynamic Planner (DT) rating. Funds are selected for their ability to meet agreed investment objectives, value for money, investment performance and to help protect retirees from the risks associated with investing while drawing an income in retirement. A strict governance process exists which means advisers can be confident in the quality and ongoing management of the funds. How did we select the funds? The funds were chosen using a range of selection criteria. Suitability choice to meet the needs of different clients Simplicity clearly articulated objectives and outcomes Future proofing considering current and future needs of investors Marketability brand and performance Risk range of risk profiles many with DT Ratings including risk targeted options Cost price and value for money Monitoring each fund is monitored regularly against a predetermined set of criteria Suitability Monitoring Simplicity Cost Future proofing Risk Marketability 2
TRA fund proposition The fund range can be tailored to a client s investment and income objectives, attitude to risk and cost but provides different fund management styles, governance and fund mechanisms. Externally managed funds Nine risk-defined, actively-managed funds with strong performance track records, investment objectives appropriate for a retirement income product with regular governance from Square Mile investment consultancy. Active Canada Life risktargeted & riskmanaged funds Five risk-targeted, actively-managed funds from Canada Life Investments which use strict asset allocation and volatility controls to remain within a range of DT profiles (cautious to adventurous options). Two risk managed funds from Canada Life Investments: 1. (0%-35% Shares) 2. (40%-85% shares). Protected funds Active and Passive Protected fund options with the potential for growth over the long term which aim to protect the unit price so that it doesn t fall below 80% of the highest unit price achieved. Passive Index portfolios A range of risk-managed Cautious, Balanced and Adventurous passive funds from Canada Life made up of a basket of index-trackers from Vanguard. Protected Cautious Balanced Adventurous Passive 80% Protected Index Portfolio Cautious Index Portfolio (Vanguard) Balanced Index Portfolio (Vanguard) Adventurous Index Portfolio (Vanguard) (0%-35% Shares) AXA Distribution Portfolio 7 Portfolio 3 AXA Framlington Balanced Janus Henderson Global Equity Income Active Investec Multi-Asset Protector Portfolio 4 Invesco Perpetual Distribution (40%-85% Shares) Portfolio 5 Jupiter Merlin Growth Portfolio Threadneedle Equity Janus Henderson Cautious Portfolio 6 Threadneedle Dynamic Real Return Jupiter Merlin Balanced Cash Insight Liquidity 3
The funds in more detail There are 22 funds in total within TRA, 7 of these are actively-managed funds from Canada Life Investments with the remainder managed by other well-known, experienced, expert investment fund managers. Risk-targeted funds We offer five actively-managed risk-targeted Canada Life Investments Portfolio funds which provide an easy, cost-efficient way of your clients meeting their long-term needs whether they are looking for growth, income or a combination of the two. These funds invest in a wide range of asset types, countries and sectors to create diversified investment solutions. The five funds are numbered 3 through to 7, each offering a different risk level aligned to Dynamic Planner s risk profiles 3 to 7 and invest into Canada Life Investments OEICs named LF Portfolio III, IV, V, VI and VII. The concept is straightforward - as the risk rises so does the potential return and the likelihood of volatility. The lower the risk, the lower the potential return and volatility. Dynamic Planner, a leading profiling tool used by many advisers, provides the asset allocation for the risk profiles that these funds are aligned to and the Portfolios adhere strictly to each of the risk profile asset allocations. The portfolios won t deviate from their initial risk levels which ensures ongoing suitability for clients. Cautious Balanced Adventurous Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 Expected Return Cash 15% Fixed Income 53% Equities 24% UK Property 8% Cash 10% Fixed Income 41% Equities 41% UK Property 8% Cash 5% Fixed Income 30% Equities 58% UK Property 7% Cash 4% Fixed Income 20% Equities 71% UK Property 5% Cash 0% Fixed Income 10% Equities 85% UK Property 5% Low High 3 4 5 6 7 Low Amount of risk High Fund allocations can change over time and the above charts are indicative. Current allocations can be found on the fund fact sheets available on our website. These Portfolio funds are primarily funds of in-house funds. Each fund taps into the expertise of Canada Life Investments fixed income, equity and property managers. They believe that active fund management can outperform the market over time and use a pragmatic long-term approach that can be adapted to prevailing market conditions. 4
Risk-managed funds You also have access to two of Canada Life Investments most popular actively-managed funds. (0%-35% Shares) The fund seeks to provide long-term capital growth and income through a portfolio of UK income-generating assets bonds, equities and direct property. The strategy used to manage this fund is straightforward a diversified portfolio with low volatility which aims to deliver reasonable growth and income over time. Those in or approaching retirement with a conservative attitude to investing still need steady and reliable growth but are keen to preserve their capital - exactly what this fund sets out to achieve. The fund invests into the LF 0%-35% OEIC. (40%-85% Shares) The fund aims to achieve long-term capital growth by holding a global portfolio of assets including UK and international equities, fixed income and cash. As a global, multi-asset diversified fund clients should receive a smoother journey. The fund invests into the LF Balanced OEIC. Externally managed funds We select and monitor a further range of actively managed funds for The Retirement Account in consultation with Square Mile, a respected independent investment consulting and research organization. This fund range is designed to cater for the needs of different investors with different attitudes to risk. Square Mile s team of investment analysts is one of the strongest and most respected in the UK. Their focus is investment research, meeting fund managers to understand how they work, how they think and how they react to markets. INVESTMENT CONSULTING & RESEARCH The nine funds below were chosen based on 3 distinct categories. Categories Cautious Balanced Adventurous Peer aware Outcome orientated Income bias Looking to outperform funds which are similar in terms of objectives or asset allocation Looking for a positive return above inflation and less concerned about competitors performance Looking for good overall total return with an emphasis on dividend yield for performance Janus Henderson Cautious Threadneedle Dynamic Real Return Invesco Perpetual Distribution AXA Framlington Balanced Jupiter Merlin Balanced AXA Distribution Threadneedle Equity Jupiter Merlin Growth Janus Henderson Global Equity Income 5
Passive funds Our passive range consists of three funds, each invested in a basket of index tracker funds managed by Vanguard and ishares exchange traded funds, provided by BlackRock. The risk level of each passive fund is determined by the amount invested in different tracker funds. These funds will be regularly monitored with Square Mile to determine the most pertinent asset allocation based on market conditions. Cautious Index Portfolio Cash Bonds Cash Equities Balanced Index Portfolio Bonds Cash Cash Equities Adventurous Index Portfolio Bonds Equities Fund allocations can change over time and the charts are purely indicative. Protected funds Stock markets can be volatile which can be damaging for those seeking to take income during their retirement, especially when negative performance happens during the early years. We have two protected funds that are designed so that their unit price never falls below 80%* of the highest unit price the funds have ever achieved: 1. 80% Protected Index Portfolio (PIP) Passive. 2. Investec Multi-Asset Protector (MAP) - Active. This cushioning against major falls in the value of their money enables investors to be more confident in managing retirement income. The Protected Index Portfolio is available exclusively through The Retirement Account and uses three main components: Basket of Vanguard and ishares Index funds 1. A basket of index trackers provides the growth of the fund + + Volatility control at 8% 2. The volatility control mechanism aims to limit the movements in unit price Put option to provide protection 3. The Put provides the protection and is run on our behalf by Morgan Stanley A customer brochure and other support material are available for this fund. * The protection is not guaranteed. The protection is provided by Morgan Stanley (PIP) and Deutsche Bank (MAP). If either of these companies become insolvent the protection could fail. 6
Executive Summary the Threadneedle Dynamic Real Return fund replacing the Standard Life Investments Global Absolute Return Strategies fund. Seven of the nine strategies meet Square Mile s there are mitigating factors that can explain this. We do not have any pressing concerns at the current time with regard to any of the strategies and continue to maintain conviction in all of the funds within this collection. Outcomes Peer Group Aware Outcome Orientated Income Bias Cautious Balanced Flexible Henderson Cautious Threadneedle Dynamic Real Return Invesco Perpetual Distribution AXA Framlington Balanced Jupiter Merlin Balanced Portfolio AXA Distribution Threadneedle Equity Jupiter Merlin Growth Portfolio Henderson Global Equity Income Key: Meeting Objective Behind Objective Objective Not Met - expected and explainable Objective Not Met INVESTMENT SERVICES (REPORTING TO THE RISK, CAPITAL AND INVESTMENT COMMITTEE OF THE BOARD OF MGM ADVANTAGE LIFE LIMITED) HELD AT 110 CANNON STREET, LONDON EC4N 6EU ON Tuesday 18 th April 2017 at 9:30am Retirement Advantage M. Gonnard (MG) Chair S. Smith (SS) C. Fazzini-Jones (CFJ) Apologises P. Carter (PC) T. Gosden (TG) Apologises M. Wain (MW) Apologises K. Sherwood (KS) R. Buckmaster (RB) Secretary Square Mile M. James (MJ) J. Monaghan (JM) J. Broomer (JB) Apologises R. Romer-Lee (RRL) A. Johnston (AL) Fund monitoring Funds managed by Before Canada Life Investments funds are launched they have a fit for purpose test to ensure they meet all the investment, operational, governance and compliance standards that Canada Life Investments set. On an ongoing basis all of the funds in the range are monitored by Canada Life Investments to ensure they continue to meet the expected standards. Performance of the funds is monitored regularly to ensure reasons for poor performance are understood and that funds are being managed in line with reasonable policyholder expectations. All other Retirement Account funds All other funds within The Retirement Account follow a strict governance process with on-going monitoring taking place between MGM Advantage Life Limited (trading as Canada Life) and Square Mile. MGM Advantage Life Limited Board* Risk, Capital and Investment Committee (RCIC) The Investment Oversight Committee (IOC) is a sub-committee of the Risk Capital and Investment Committee, which is a board committee. Investment Oversight Committee Square Mile Investment Consulting and Research The IOC consists of representatives of MGM Advantage Life Limited (trading as Canada Life) and Square Mile Investment Consulting and Research. The Investment Oversight Committee meets monthly to review the performance of the funds with an in-depth analysis of each fund taking place quarterly. Should a fund become a cause for concern and remain so it may result in a recommendation to remove the fund from the range. An abstract of the minutes from the monitoring meetings together with a quarterly report and Macroeconomic review is published on our website. Canada Life Retirement Advantage Quarterly Report Quarter 1 2017 Macroeconomic Review Q1 2017 MINUTES OF A MEETING OF THE INVESTMENT OVERSIGHT COMMITTEE Executive summary *Although part of Canada Life, the legal name of the company will remain MGM Advantage Life Limited (trading as Canada Life) until the completion of the Part VII transfer of business in accordance with the Financial Services and Markets Act 2000 (FSMA 2000). 7
Fund management charges The fund range is competitively priced. Fund fact sheets can be found on our website: www.canadalife.co.uk/adviser Cautious funds AMC % OCF % Insight Liquidity A 0.10 0.10 Cautious Index Portfolio P 0.25 0.25 (0%-35% Shares) A 0.31 0.31 Portfolio 3 A 0.36 0.36 Portfolio 4 A 0.43 0.43 Janus Henderson Cautious A 0.74 0.83 Invesco Perpetual Distribution A 0.92 0.92 Threadneedle Dynamic Real Return A 0.85 1.04 Protected funds AMC % OCF % 80% Protected Index Portfolio P 0.75 0.86 Investec Multi-Asset Protector A 0.80 1.06 Balanced funds AMC % OCF % Balanced Index Portfolio P 0.25 0.25 (40%-85% Shares) A 0.40 0.40 Portfolio 5 A 0.51 0.51 Portfolio 6 A 0.57 0.57 AXA Framlington Balanced A 0.75 0.80 AXA Distribution A 0.85 0.86 Jupiter Merlin Balanced A 0.85 1.73 Adventurous funds AMC % OCF % Adventurous Index Portfolio P 0.25 0.25 Portfolio 7 A 0.61 0.61 Janus Henderson Global Equity Income A 0.85 0.95 Threadneedle Equity A 1.00 1.16 Jupiter Merlin Growth Portfolio A 0.85 1.83 A Actively-managed P Passively-managed 8
Fund proposition summary The Retirement Account is a unique drawdown solution designed to provide clients with a combination of flexibility, security of income and capital, and growth. Within a single tax-advantaged wrapper clients can select any combination of: Risk targeted, actively-managed funds from Canada Life Investments which use strict asset allocation and volatility controls to remain within a range of DT profiles (cautious to adventurous options) Risk managed Canada Life Investments funds ( 0%-35% Shares) + ( 40%-85% Shares) Index portfolios: A range of risk-managed Cautious, Balanced and Adventurous passive funds made up of a basket of index-trackers from Vanguard. A range of risk-defined, actively-managed funds with strong performance track records, and investment objectives appropriate for a retirement income product with regular governance from Square Mile investment consultancy Two (active and passive) protected fund options with the potential for growth over the long term, each of which can never fall below 80% of the highest unit price it has ever achieved. The unique ability to purchase a guaranteed income via an annuity within the drawdown wrapper - either at outset or a later date. Risk- managed Not DT rated Risk-managed Risk-targeted Cautious Balanced Insight Liquidity (40%-85% Shares) AXA Framlington AXA Distribution Active Passive Active Investec MAP 2 Threadneedle Dynamic Real Return Invesco Perpetual Distribution Jupiter Merlin Balanced (0%-35% Shares) Janus Henderson Cautious Cautious Index Portfolio 80% Protected Index Portfolio Balanced Index Portfolio Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Adventurous Janus Henderson Global Equity Threadneedle Equity Jupiter Merlin Growth Portfolio Adventurous Index Portfolio Portfolio 7 9
About Canada Life Canada Life has been providing retirement solutions for our customers for a long time. We ve actually been in the UK since 1903, looking after the retirement, investment and protection needs of customers. We re here to help you get ready for your retirement with confidence, by making things clear and straightforward. Our vision is to help build better futures and be a world class financial services provider. Putting customers at the heart of everything we do and working in line with our values of people, excellence, integrity and together. We help to build better futures. Visit www.canadalife.co.uk to find out more. What you can expect from Canada Life Great service, support and financial strength. At Canada Life we believe in being here to support you through retirement, so we make it our mission to make the process of dealing with us as easy and as smooth as possible. To show our commitment to service excellence, we have introduced a Service Charter. We re also proud of our heritage and our financial strength. We ve been around for a long time. In fact, we were founded in 1847 in Canada, making us the oldest Canadian life assurance company. Canada Life is part of Great-West Lifeco Inc., one of the largest Canadian life and health insurance companies. We have 767bn of assets under management as at 1 January 2018. Great-West Lifeco serves several million people worldwide, providing a wide range of retirement savings and income plans, as well as comprehensive protection contracts for individuals and families. Contact us You can find out more about The Retirement Account fund proposition by: Emailing: sales.ra@canada-life.co.uk Calling: 0800 912 9945, or Visiting our website at: www.canadalife.co.uk/adviser 10
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Telephone calls may be recorded for training and quality monitoring purposes. MGM Advantage Life Limited, trading as Canada Life, is part of Canada Life Group (UK) Limited. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales. Registered no. 08395855. Registered office: 6th Floor, 110 Cannon Street, London EC4N 6EU. 40-321 10/18