Zurich’s corporate savings business has launched an auto-enrolment default investment fund in partnership with asset management organisation Schroders.
The Zurich Dynamic Lifestyle Portfolio will be available to new and existing members of Zurich’s workplace pension schemes.
The fund consists of three underlying funds. Schroders will manage the mixed investments and the defined contribution (DC) pre-retirement funds, while the Zurich deposit and treasury fund will be managed by Threadneedle.
The main features of the Zurich Dynamic Lifestyle Portfolio are:
- A growth engine that combines a core equity portfolio, diversifying assets and explicit downside risk management.
- A downside risk management process that is applied automatically in volatile market conditions, mitigating the chances of material loss of capital, while still allowing Schroders to manage the portfolio to deliver real returns.
- A new approach to annuity price targeting in the pre-retirement phase, with a portfolio that also seeks to reduce the effect of possible future rises in bond yields.
- An automated de-risking facility that starts five years from an individual’s selected retirement date. This allows DC members the possibility of benefiting fully from the growth potential, while protecting them from large capital losses.
- Rigorous governance monitoring and oversight.
Dave Lowe, head of corporate propositions at Zurich UK Life, said: “Auto-enrolment has provided a timely opportunity to review our default option. We undertook extensive customer research to find out what is important to them when making investment decisions.
“We have listened to what our customers want and have designed our new default fund to provide an effective, outcome-driven investment solution.”
Stephen Bowles, head of DC investment at Schroders (pictured), added: “One of the key components of the default strategy is the automated switching between Zurich mixed investment and the pre-retirement strategies.
“We have undertaken extensive financial modelling to test various switching scenarios. Due to the way in which the mixed Investment fund is managed, the results indicated that it is possible to remain in the growth engine until five years from retirement while still protecting the portfolio from large capital losses.”