Lifecycle investing - matching investment strategy to the stage a person has reached in their life - may provide the answer to an increasing demand for new solutions to achieving financial goals, according to ABN AMRO.
The asset management firm says interest in guaranteed lifecycle funds is growing as the market volatility continues.
It has launched a Capital Protected Lifecycle Funds (CPLFs), offering investors exposure to diversified global equity markets with a capital guarantee on maturity.
ABN AMRO says, typically, lifecyle investing starts with a comparatively high risk, high return strategy - when the investor is a long way from their savings goal - that gradually moves to low risk, low return strategy as the investor approaches their ‘life event’.
It points out the appropriateness of lifecycle investing has not been lost on the Government, as by 2012 all employers that plan to auto-enroll their workforce into existing DC schemes will have to offer a lifestyle default.
It says it has seen a significant increase over the past 12 months in distributors and advisers looking at funds with in-built guarantees as market volatility creates greater concern in consumers’ minds.
John Townley, head of UK insurance sales at ABN AMRO, says: “The UK financial services industry is changing.
“We are seeing the continuation of an unstoppable trend in private provisioning as individuals take greater responsibility for their future financial wellbeing.
“However, with limited investment knowledge and time to spend, investors run the risk of finding themselves with a portfolio that leaves them short of their retirement or lifestyle goals.
“As a result, investors need professionally managed solutions with a focus on financial outcomes, capital preservation and income.
“Few, if any, products in the UK today, offer the same level of security, return and flexibility that the CPLFs offer.
“We are confident that these funds will continue to provide a simple way for investors to meet their future financial goals.”
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