Fidelity Investments has plans to launch three Target Funds in the UK towards the end of May, as a p...
Fidelity Investments has plans to launch three Target Funds in the UK towards the end of May, as a part of a new strategy of handling asset funding over time.
These three Fidelity Wealthbuilder Target Funds will be the first funds of their sort to manage asset allocation that, as the maturity date approaches, become more and more sensitive to greater cash and bonds exposure.
Advisers will be able to choose between three different funds with different "target" or maturity dates - 2010, 2015 and 2020 - depending on their clients' individual aims.
By using an asset allocation model adjusted towards the specific target date, these funds - which will be arranged as fund-of-funds - will attempt to produce capital growth longer-term.
According to Fidelity, this will ensure that the fund's concentration is on capital growth in the budding years but becomes more focused on protecting capital as the fund approaches its target.
"Unlike traditional funds that are managed to a predetermined asset, geographic, or sector mandate, these funds will change their asset allocation over time along an 'asset migration path' which is designed to more closely align the funds' strategy with investors' changing lifetime needs. As such, these funds represent a revolutionary new way of investing," says Stuart Holah, head of IFA business at Fidelity Investments.
"After four years of declining stockmarkets, and with a long-run expectation for a continued low interest rate and low inflation environment, evidence from IFAs and their clients suggests there is a need for a new approach. There is a requirement for a product which focuses not only on diversification but which also manages volatility exposure over time to reduce the impact of future event risk."
Richard Skelt, who currently manages funds such as WealthBuilder, MoneyBuilder Global, Portfolio Fund, Fidelity Funds World Fund and Fidelity Funds Portfolio Selector, will be managing the funds, supported by a team of five investment professionals.
The minimum lump sum invested in these funds will be £1,000 and the minimum monthly savings will amount to £50.
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards