Taking Control of Investment Decisions

Despite the recent volatility in global stock markets, most equity investors are still sitting on substantial gains built up over the past few years. Many commentators believe that the outlook for shares is still bright, with strong earnings growth at many companies and traditional measures, such as P/E ratios, indicating that equity valuation are not yet looking stretched.

Whilst some with-profits funds have benefited from strong stock market performance by maintaining a reasonable equity content, this is by no means universal. There are likely to be many with-profits clients whose policies remain heavily invested in funds with substantial fixed interest holdings. For example, a number of closed with-profits funds continue to offer very little exposure to equities.

By remaining invested in a with-profits fund, clients are accepting that all investment decisions will be made by the life office. The financial solvency of the fund will also determine the extent to which it can afford to invest in 'real' assets, such as equities and property.

Whilst guarantees and options can provide valuable benefits for some clients, for many weaker funds it often drives them to adopt more defensive investment strategies.

Offering Choice & Flexibility
The inability to tailor the asset allocation and fund choice for individual clients can often be a major drawback for those invested in with-profits funds, particularly where the asset mix of the fund no longer matches the client's requirements. Contrast this with unit-linked MultiManager platforms, offering greater investment choice and flexibility, and the benefits are clear.

Many clients have already recognised the benefits associated with delegating investment decisions. While investing in Managed Investment Solutions or Asset Allocator Funds, clients know exactly what they are buying and how their investments will be managed.

In addition, Skandia Investment Management's process of selecting and blending different fund managers and investment styles provides an extra layer of risk diversification. In effect, this can help 'smooth' investment returns and reduce risk. All of which is in strong contrast to the opaqueness of many with-profits funds, which are usually restricted to a single fund manager.

Unlimited Switching
For those clients looking to also make fund selection decisions, the Self Select range remains unique in the unit-linked investment market. Our extensive range of third party fund links, combined with unlimited switching, offers investors maximum flexibility. Few MultiManager propositions offer such an extensive range of funds, and some even place restrictions on the number of switches over the lifetime of the contract - a serious active disadvantage for those following a more active portfolio management strategy.

The true investment flexibility offered by Skandia's MultiBOND products allow clients to select and maintain the most appropriate investment portfolio to suit their risk profile - whether using the Investment Management or Self Select approach, or a combination of the two.