Four risk managed funds
Economic uncertainty and fluctuating market conditions can make it challenging in the current climate, not only to invest, but also to ensure that a portfolio is aligned with a client’s objectives on an ongoing basis. As the financial market landscape evolves, we have a responsibility to ensure that our products stay in tune with both the investment environment and customer needs. We want to have the necessary flexibility to be able to take advantage of opportunities that present themselves, while maintaining some protection against unexpected market movements.
The Diversified Risk Managed (DRM) range allows advisers to choose different levels of risk to suit their customers’ long-term objectives. This mirrors the broad Canada Life Asset Management multi-asset approach, where we believe remaining disciplined and pragmatic remains key to unlocking performance.
Investing is about finding the right balance of risks and opportunities. Sometimes, on a short-term basis, this includes avoiding downside as much as benefitting from upside. Multi-asset funds seek this optimal balance between risk and return by investing across different asset classes, sectors and geographies. This level of diversification means that clients have more sources of potential return, which will behave differently according to the prevailing market conditions. It also helps to manage portfolio risk. This stability puts advisers in a better position to withstand dips in market performance and remain confident in the financial journey as they work towards reaching their customers’ financial goals.
We believe the consistency and stability of a fund’s risk profile is important to investors and decision-making advisers. Central to our approach is volatility targeting, whereby the funds are managed to stay within specific expected volatility parameters and therefore a static risk profile, while aiming to maximise returns. The different funds within the DRM range match different investors’ appetite for risk.
The range spans all risk profiles from 3-6, as defined by the third-party risk profilers, Defaqto, and has the flexibility to invest globally across equities and fixed income as well as global property and infrastructure opportunities. The Multi-Asset team ensures that the funds stay aligned to the targeted risk bands.
By targeting a specific volatility range, this helps prevent excessive movements up and down the risk scale depending on the proportion of risk assets held, and the changing volatility of risk assets in the fund. Correlation, volatility and returns are continually assessed through portfolio management, and rebalanced where necessary, to ensure they stay within the volatility bandings of each fund. Portfolio positioning is reviewed daily.
When selecting the funds that make up each portfolio, we take a pragmatic approach based on the strategic asset allocation (SAA) and current tactical asset allocation (TAA) view. Where suitable, we’ll use active in-house funds, lowering overall costs. In addition, we use passive funds to implement top-down sector, factor and style themes, with these offering comparatively low cost and efficient implementation of our investment ideas. We use active third-party funds for specialist allocations.
To align each fund to a volatility band, the expected volatility of the asset allocation of each is regularly checked by an independent specialist.
In order to thoroughly test our investment ideas, highlighting convictions and views, the Multi-Asset team meets quarterly with CLAM’s specialist asset class fund managers. This is followed by a meeting of the asset class heads to review and if appropriate adjust the SAA – including regional equity allocations, credit, duration and FX risk – based on the starting SAA, asset mix meeting, multi-asset team views and liquidity considerations. Final asset allocation is reviewed quarterly by the independent SAA provider.
In addition to those afforded by the SAA, we seek out opportunities for the funds to benefit from shorter-term market trends. These tactical opportunities are implemented through shorter-term asset allocation when markets are volatile. In making these decisions, we combine our assessments of the global macroeconomic picture, valuations across asset classes and – drawing on research from the trading desk – a technical assessment of the potential pricing anomalies and momentum in asset prices.
Multi-asset funds in general can be suitable for all types of clients – whether they’re accumulating wealth or are in the process of drawing down in retirement. They’re ideal for clients who want to be sure their investments are managed closely in line with the risks they’re willing to take, but don’t want to pay the higher charges associated with a single investment solution.
The DRM range could be a good fit for advisers looking for predefined multi-asset solutions aimed at a target market of clients who are looking for long-term growth within their assigned risk profile. By taking both a longer-term view within the scope of the customer’s risk profile, and with a tactical view on shorter and medium-term markets to maximise returns, the DRM range can offer a straightforward way of meeting their needs now and into the future.
Canada Life Asset Management's actively managed, globally-diversified multi-asset funds are designed to help our investors and their clients meet their objectives through long-term capital growth and/or income.
Our WS Canlife Diversified Risk Managed funds can be accessed through a range of platforms. We continue to develop links with other platforms to provide greater accessibility for advisers.
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Important Information
The value of investments may fall as well as rise and investors may not get back the amount invested.
No guarantee, warranty or representation (express or implied) is given as to this document’s accuracy or completeness.
This page does not constitute a direct offer, or recommendation, to subscribe for shares in the fund. A full description of the risks of investing in the fund is set out in the latest Prospectus and Key Investor Information Document (KIID) available in the fund literature section.
The funds may invest in property funds that may be illiquid and subject to wide price spreads, both of which can impact the value of the fund. The value of the property is based on the opinion of a valuer and is therefore subjective.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
