riends Provident has launched a fourth multi-manager fund for its Activ defined contribution range, blending active and passive mandates.
Aiming to outperform the ABI UK Pension Balanced Managed sector average over rolling three-year periods, the Activ Consensus Enhanced is split 70:30 respectively between passive and active funds.
The fund's target alpha is 0.5% to 0.75% on an annualised basis, with a tracking error of 1% to 1.5%.
The 70% passive portion is in the BGI Historic Priced Consensus fund, which follows the asset allocations of the Caps Balanced Pensions funds sector.
The 30% active portion is made up of five funds selected by Mellon's Investment Research unit, typically from among its AA and A-rated portfolios.
At launch last week, the 30% portion was made up of 10% in Baillie Gifford Overseas, 5% in Investec UK Blue Chip, 5% in Lazard UK Income, 8.5% in F&C Fixed Interest and 1.5% in First State Global Emerging Markets Leaders.
Manager of pension investment partners at Friends Provident Philip Thitchener said there is no emerging market exposure in the Consensus fund and the allocation to this area, through First State's Angus Tulloch, is likely to be increased.
If necessary, the Committee will change the active fund managers, while the elements of the fund will be rebalanced monthly to maintain the 70:30 mix.
Charges on the Activ range are designed to meet the initial 1% stakeholder requirements, despite the amended 1.5% for 10 years structure now available, so clients will not have to change holdings when the cap drops to 1% after a decade.
Fund management charges and additional expenses on Activ Consensus Enhanced are capped at 0.03%.
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