For intermediaries Select Risk Profile Portfolios – quarterly investment report · 2020-06-10 · Page 3 of 14 About the Select Risk Profile Portfolios There are six funds in the

For intermediaries

Select Risk Profile Portfolios – quarterly investment reportQuarter one 2020

Page 2 of 14

ContentsAbout the Select Risk Profile Portfolios 3

Market review – quarter one 2020 4

Fund performance 6

Adventurous Select Portfolio 7

Growth Plus Select Portfolio 8

Growth Select Portfolio 9

Balanced Plus Select Portfolio 10

Balanced Select Portfolio 11

Cautious Select Portfolio 12

Select Sector Portfolio asset allocation 13

Important information 14

The information contained in this report constitutes a factual review of performance only and is correct as at 31 March 2020. It shouldn’t be taken as a recommendation or advice. This communication is for financial advisers only. It mustn’t be distributed to, or relied on by, customers.

There’s no guarantee that fund objectives will be met. The value of an investment may go down as well as up and investors may get back less than they invest.

Please note: all performance data shown in this report is sourced from Financial Express.

Page 3 of 14

About the Select Risk Profile PortfoliosThere are six funds in the Select Risk Profile Portfolio range. Each targets a different level of risk, ranging from 'below' to 'above average'. The volatility ranges that each portfolio targets are shown in brackets in the diagram below.

We’ve employed independent consultant Morningstar Investment Management Europe Limited (Morningstar) to help us build and manage these portfolios. Morningstar takes strategic and tactical asset allocation decisions to help the portfolios meet their two primary objectives, which are:

• to keep within targeted risk ranges over a market cycle, and

• to deliver the best possible performance for the amount of risk taken.

To meet these objectives, Morningstar regularly reviews the portfolios and recommends changes where they believe this is necessary. However, there’s no guarantee that the funds will meet their objectives.

The risk (volatility) ranges for each portfolio are measured using annualised standard deviation over a market cycle. Standard deviation measures the extent to which a fund’s returns have historically deviated from its own average. The higher the percentage, the greater the risk (volatility) (and, generally, the higher the potential returns). There's no guarantee the portfolios will sit within their target volatility ranges. The asset allocation of each is based on long-term historical volatility data, which may not be repeated in the future.

The Select Risk Profile Portfolios are built mainly, but not exclusively, from the funds in our Select Sector Portfolio range. The eight Select Sector Portfolios are made up of what we believe to be the best blend of funds in their sector, many of which are rated by Morningstar Inc.

The value of these investments can fall as well as rise for a number of reasons; for example, market and currency movements. Your clients may get back less than originally invested.

For more information on how our Select Risk Profile Portfolios work and how to use them, please visit our website at www.aegon.co.uk/selectportfolios

Adventurous

Growth Plus

Balanced Plus

Balanced

Cautious

Conservative

Growth

Adventurous

Growth Plus

Balanced Plus

Balanced

Cautious

Growth

Adventurous (16% - 18%)

Growth Plus (14% - 16%)

Growth (12% - 14%)

Balanced Plus (10% - 12%)

Balanced (8% - 10%)

Cautious (6% - 8%)

Page 4 of 14

Market review – quarter one 2020The first quarter of 2020 saw a sharp downturn for all main global equity markets as the world felt the dramatic impact of the coronavirus (COVID-19) pandemic. First documented in late 2019, coronavirus spread globally at speed with confirmed cases approaching one million at the end of March and tens of thousands succumbing to the illness. Progressively, global governments sought to slow the transmission of the virus and save lives by implementing social distancing policies aimed at reducing contact between individuals. These policies differed from region to region but temporary restrictions on the social liberties of the global population triggered a substantial drop in global economic activity. The UK experienced the largest falls over the period as stocks endured their worst quarter since 1987. Emerging markets also saw substantial declines as investors turned away from Chinese stocks amid coronavirus fears and deteriorating relations between Russia and Saudi Arabia led to an oil price war. European equities experienced similar falls as the region became the epicentre of the pandemic, with spiralling death tolls in both Italy and Spain at the core. US equities tumbled faster than ever before, including in the Great Depression of 1929. The Chicago Board Options Exchange's CBOE Volatility Index (VIX), a measure of US equity volatility, reached the highest level since it launched in 1990. Asian and Japanese equities also fell as economic activity was curtailed by the ongoing pandemic.

In fixed income markets, global corporate bonds suffered losses amidst poor liquidity and concerns that plunging earnings may lead to a credit crisis. Alternatively, economic risks and falling interest rates contributed to increased investor demand for perceived ‘safe-haven’ investments, such as UK government bonds and gold bullion, which both made gains. Sterling depreciated sharply in currency terms, enhancing the returns that UK investors received from overseas markets.

How did the major markets perform over 12 months? Over the past twelve months, all global equity markets have fallen in value as the scale of the downturn in the first quarter of 2020 eclipsed earlier performance. UK stocks saw the most significant declines as political instability and Brexit uncertainty also weighed on UK assets. Emerging markets, Asian and European equities also declined over a period of challenging economic growth globally. Japanese and US equities fell, but showed signs of some resilience due to positive economic policy earlier in 2019. In fixed income, UK government bonds (gilts) gave the strongest performance, benefiting from plunging interest rates over the period.

Source: Financial Express, produced by Aegon. Charts compiled using total return indices to 31 March 2020. Figures in sterling so include the effect of currency fluctuations. Past performance is no guide to future performance.

FTSE Actuaries UK Conventional Gilts All Stocks

TR in GB

UK Gilts

FTSE All Share TR in GB

UK

LIBOR LIBID GBP 1 Week

TR in GB

Cash

IBOXX UK Sterling Non-Gilts

All Maturities TR in GB

UK Corporate Bonds

S&P 500 TR in GB

USA

TSE TOPIX TR in GB

Japan

FTSE World Europe ex UK

GTR in GB

Europe ex UK

FTSE Asia Pacific ex Japan

GTR in GB

Asia Pacific

FTSE Emerging GTR in GB

Emerging Markets

Ret

urn

(%)

-30

-25

-20

-15

-10

-5

0

5

10

-25.1

-14.2-12.0

-19.0

6.3

-3.4

-17.5 -15.8

0.1

FTSE Actuaries UK Conventional Gilts All Stocks

TR in GB

UK Gilts

FTSE All Share TR in GB

UK

LIBOR LIBID GBP 1 Week

TR in GB

Cash

IBOXX UK Sterling Non-Gilts

All Maturities TR in GB

UK Corporate Bonds

S&P 500 TR in GB

USA

TSE TOPIX TR in GB

Japan

FTSE World Europe ex UK

GTR in GB

Europe ex UK

FTSE Asia Pacific ex Japan

GTR in GB

Asia Pacific

FTSE Emerging GTR in GB

Emerging Markets

Ret

urn

(%)

-30

-25

-20

-15

-10

-5

0

5

10

-18.5

-2.8 -2.9

-13.4

9.9

1.5

-8.0-11.5

0.5

Page 5 of 14

What were the key events in the major markets in quarter one?

Here’s a round-up of some of the key events that shaped the investment returns we’ve seen across the major markets.

The UK left the European Union on 31 January 2020 and entered an 11-month transition period. As COVID-19 spread globally, the Bank of England (BoE) cut interest rates to 0.1%, bought gilts (government bonds) and corporate bonds and incentivised lending to small businesses. The new Chancellor of the Exchequer, Rishi Sunak, announced a raft of government spending measures totalling around 15% of Gross Domestic Product (GDP), designed to support the National Health Service (NHS) and to mitigate the impact of social distancing measures on individual and corporate finances.

In the US, the Senate acquitted President Donald Trump on two articles of impeachment that had been passed by the House of Representatives. The US central bank, the Federal Reserve (Fed), slashed interest rates by 1.5% to near-zero and announced their first ever corporate bond purchase programme. Figures released in March showed more than 3 million new unemployment claims in the previous week; beating the previous record of 695,000 jobless filings in 1982. The US government responded by passing the Coronavirus Aid, Relief and Economic Security Act, pledging government spending of approximately 10% of GDP to support households and companies affected by the downturn.

In Europe, the spread of coronavirus became the focal point of the world with Spain and Italy particularly impacted from its rapid spread. These countries led the implementation of social distancing policies across much of the continent. In an effort to help countries alleviate the economic burden of extensive lockdown arrangements, the European Commission suspended its rules limiting government spending. This supported the announcement of substantial fiscal support for Italy and Spain, while Germany also abandoned its “black zero” policy of balancing the budget to support the economy.

In Japan, data released over the quarter showed that the economy contracted by 1.8% in the final quarter of 2019 amidst an increase in the consumption tax rate. In keeping with most other developed economies, Japan’s government announced substantial spending measures designed to help households and businesses withstand the economic impact of the COVID-19 outbreak. The spending package is equivalent to more than 10% of GDP. Global restrictions on sporting events to limit the spread of the virus led to the Tokyo Olympics being postponed from 2020 until 2021.

In Asia Pacific regions, China was the first country to enforce significant social distancing policies to combat COVID-19, particularly in the city of Wuhan and the province of Hubei, where the disease first surfaced. Implemented in January, these measures had a substantial economic impact, indicated by record low measures of activity reported in February’s business surveys. Despite recording early infections, South Korea and Singapore appeared to contain the spread of the disease through rigorous infection control measures. In Australia, the expected impact on economic growth led the Royal Bank of Australia to cut interest rates twice in March to 0.25% (previously 0.75%).

In Emerging Markets Iran launched retaliatory strikes against the US following the death of top Iranian general Qasem Soleimani in a drone strike early in the year. The “OPEC+” alliance of oil producers was unable to agree production cuts due to Russian opposition. This triggered a price war that contributed in a collapse in the price of West Texas Intermediate (WTI) crude oil from over $60 at the start of the quarter to $20.48 by the end of March. Moody’s became the final main ratings agency to remove an investment grade rating, a mark of higher quality, from South African debt while the country was in the midst of its own pandemic-related lockdown. This contributed to the Rand reaching its weakest ever level against the US dollar.

In fixed income markets, amidst plummeting interest rates, global government bond yields fell dramatically in March with UK 10-year gilt yield reaching a new record low of 0.16%. Corporate bonds struggled amidst the market turmoil. As corporate earnings expectations fell, credit spreads (the additional yield that investors demand from corporate borrowers over government borrowers) widened significantly. This led to substantial losses in higher-risk sectors such as high-yield bonds. In the March budget, the UK’s Chancellor launched a consultation to reform the retail price index of inflation (RPI). This is a risk to inflation-linked gilts, which are linked to the RPI and may be vulnerable if the government switches to a lower measure of inflation.

Page 6 of 14

Fund3 months

(%)Year to date

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Adventurous Select Portfolio -22.1 -22.1 -13.2 -3.0 2.2

Growth Plus Select Portfolio -19.7 -19.7 -11.4 -2.5 2.1

Growth Select Portfolio -16.9 -16.9 -9.1 -1.8 2.1

Balanced Plus Select Portfolio -13.5 -13.5 -6.5 -1.1 2.2

Balanced Select Portfolio -10.9 -10.9 -4.9 -0.6 2.2

Cautious Select Portfolio -7.4 -7.4 -2.6 -0.1 2.1

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than originally invested.

The chart below shows the target risk/volatility ranges for each portfolio (the blue bands), expressed in standard deviation terms, and the orange circles show the actual level of volatility.

Three year annualised volatility, to end March 2020

Source: Financial Express. Produced by Aegon. Figures show annualised volatility from 31 March 2017 to 31 March 2020. Past performance is no guide to future performance.

Each Select Risk Profile Portfolio has a target volatility range that it aims to meet over a market cycle, which can last three years or more. Currently, the realised volatility (as measured by standard deviation) is below the target volatility range for all of the portfolios.

The Select Risk Profile Portfolios are created based on long-term market analysis, so when market risk is lower than average, we would expect to see the portfolios fall below their target volatility range. Despite higher recent volatility due to the ongoing COVID-19 pandemic, volatility over three and five years (to the end of March 2020) remains lower than over the longer term across most regional equity (shares) markets.

These target volatility ranges may be met by increasing exposure to riskier markets in each portfolio. We believe, however, that investors are best served by a diversified portfolio that matches their individual risk profile over the longer term, as opposed to chasing short-term market risk. Whether market volatility is high or low, the ranges will aim to offer what we believe is a suitable level of risk and suitably diversified asset allocation.

Fund performance

0

2

4

6

8

10

12

14

16

18

20

Balanced Plus Growth Growth Plus Adventurous

Thre

e ye

ar a

nnua

lised

vol

atili

ty (%

) Portfoliorisk range

Portfoliovolatility

Cautious Balanced

Page 7 of 14

Adventurous Select PortfolioThis fund aims to provide long-term capital growth while keeping risk in a target volatility range of 16%-18% over a market cycle, which can last three years or more. Morningstar helps us select and manage the blend of funds it contains.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Adventurous Select Portfolio -22.1 -13.2 -3.0 2.2

UK Equity Select Portfolio -27.0 -17.9 -5.2 -0.6

North American Equity Select Portfolio -15.8 -4.5 3.0 7.7

European Equity Select Portfolio -18.8 -8.8 -2.3 1.9

Japanese Equity Select Portfolio -18.1 -10.9 -3.3 2.9

Global Emerging Markets Equity Select Portfolio -22.4 -15.8 -4.6 1.4

Asian Equity Select Portfolio -15.3 -8.8 0.9 4.7

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 30 September 2009. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Adventurous Select Portfolio as at 31 March 2020. However, these can change and the performance of the Adventurous Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020

The Adventurous Select Portfolio fell by -22.1% over Q1 2020. The period was dominated by the onset of the coronavirus (COVID-19) pandemic, which rattled global equity markets and led to negative performances for all funds within the portfolio. The fund’s largest allocation in the UK Equity Select Portfolio (45.6% of assets) posted -27.0% and heavily weighed on overall performance as UK equity markets experienced the worst quarter since 1987. Elsewhere, it was the same story for US equities, as the region’s stocks fell faster than the Great Depression of 1929. Europe quickly became the epicentre of the pandemic, sending stocks tumbling across the region. Similarly, Japanese, emerging markets and Asian equities also fell to historic lows as governments across the world began to implement economically-damaging social distancing measures to help ease the spread of the disease.

Asset allocation at end March 2020

45.6% UK equities

Emerging Market equities

European equities

North American equities

Asia Pacific ex Japan equities

Japanese equities

17.0%

12.2%

11.8%

11.1%

2.3%

The figures above may not add up to exactly 100% due to rounding.

Page 8 of 14

Growth Plus Select PortfolioThe fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 14%-16% over a market cycle. Morningstar helps us select and manage the blend of funds it contains.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Growth Plus Select Portfolio -19.7 -11.4 -2.5 2.1






UK Corporate Bond Select Portfolio -5.5 -0.8 0.7 1.7

UK Gilts All-Stocks Tracker 6.9 9.6 3.8 3.9

Asian Equity Select Portfolio -15.3 -8.8 0.9 4.7

International Bond Select Portfolio 3.8 6.1 1.4 1.5

Cash 0.0 -0.2 -0.3 -0.4

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 30 September 2009. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Growth Plus Select Portfolio as at 31 March 2020. However, these can change and the performance of the Growth Plus Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020The Growth Plus Select Portfolio posted -19.7% in Q1 2020, in line with historic declines across global markets, as the economic impact of the coronavirus (COVID-19) pandemic took hold. The fund’s considerable bias towards global equities, and in particular UK equities, weighed on overall performance with the largest holding in the UK Equity Select Portfolio (42.3% of assets) ending at -27.0%. Similarly, exposure to US equities also dragged on performance, as the region experienced the fastest market declines since the Great Depression of 1929. In Europe, the pandemic took an aggressive hold of Italy and, in turn, Spain, resulting in extreme market turbulence and declines for the region. Exposure to emerging market, Japanese and Asian stocks also posted negative returns.

Contrastingly, the portfolio’s smaller weighting in fixed income markets added to portfolio returns. Global government bond assets made gains as investors turned towards traditionally-considered ‘safe haven’ assets over riskier investments. Global corporates suffered losses amidst poor liquidity over the period while Cash gave a muted return of 0.0%.


42.3% UK equities

UK Gilts

European equities


Asia Pacific ex Japan equities

UK Corporate Bonds

15.1%

11.3%

9.9%

3.7% 1.9% 1.9%

9.3%

1.8% 2.8%

International Bond

Emerging Market equities

Japanese equities

Cash


Page 9 of 14

Growth Select PortfolioThe fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 12%-14% over a market cycle. Morningstar helps us select and manage the blend of funds it contains.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Growth Select Portfolio -16.9 -9.1 -1.8 2.1









Cash 0.0 -0.2 -0.3 -0.4

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 30 September 2009. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Growth Select Portfolio as at 31 March 2020. However, these can change and the performance of the Growth Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020The Growth Select Portfolio declined to -16.9% over the first quarter of the year. The fund’s largest holding, in the UK Equity Select Portfolio (38.0% of assets), weighed on overall returns by posting -27.0%, as the region’s stock market bore its worst quarter since 1987. US stocks also experienced a particularly challenging quarter and fell over the period. It was much the same story for emerging market, European and Japanese equities, as countries across the world rallied to implement implemented social distancing measures to curb the spread of the disease at a detriment to the global economy.

Elsewhere, the fund’s exposure to fixed income, particularly in UK government bonds (gilts), added to returns as investors turned towards the perceived safety of bond markets in the face of a global economic recession. Despite this, global corporate bonds suffered losses in the midst of poor liquidity and fears of a credit crisis. Cash ended flat, in spite of sterling falling in value against other major currencies.


38.0% UK equities

UK Corporate Bonds

Emerging market equities


International Bond

UK Gilts

13.6% 9.4%

9.0%

3.7% 3.7% 6.6%

Cash

Japanese equities

European equities9.3%

6.8%


Page 10 of 14

Balanced Plus Select PortfolioThe fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 10%-12% over a market cycle. Morningstar helps us select and manage the blend of funds it holds.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Balanced Plus Select Portfolio -13.5 -6.5 -1.1 2.2









Cash 0.0 -0.2 -0.3 -0.4

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 30 September 2009. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Balanced Plus Select Portfolio as at 31 March 2020. However, these can change and the performance of the Balanced Plus Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020The Balanced Plus Select Portfolio returned -13.5%, as it’s weighting towards equities countered any gains made by fixed income markets over the first quarter. The fund’s bias to UK equities dragged down overall performance, with the UK Equity Select Portfolio (31.5% of assets) returning -27.0%, in line with the worst quarter for the region’s stock market since 1987. Against the coronavirus backdrop, North American, European, Japanese and emerging market stocks also experienced historic falls, as governments throughout the world implemented economy-inhibiting social distancing measures in order to curb the spread of the disease.

In fixed income, it was a slightly different story for government bonds as investor sentiment shifted from an appetite for riskier investments to perceived ‘safe haven’ assets. The UK Gilts All-Stocks Tracker and International Bond Select Portfolio both made solid gains and boosted overall performance. Elsewhere, corporate bonds suffered losses as a result of poor liquidity over the period, while Cash made a flat return of 0.0%.


31.5%

UK equities

Japanese equities

UK Gilts



UK Corporate Bonds

11.7%

8.8%

7.6%

7.0%

Cash

International Bond

European equities7.9%

6.6%

8.4%

10.5%


Page 11 of 14

Balanced Select PortfolioThe fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 8%-10% over a market cycle. Morningstar helps us select and manage the blend of funds it holds.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Balanced Select Portfolio -10.9 -4.9 -0.6 2.2









Cash 0.0 -0.2 -0.3 -0.4

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 30 September 2009. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Balanced Select Portfolio as at 31 March 2020. However, these can change and the performance of the Balanced Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020The Balanced Select Portfolio returned -10.9% over Q1 2020. Its balanced allocation of equities and bonds meant it was less impacted by the universal declines felt by equity markets as a result of the coronavirus (COVID-19) pandemic. The fund’s bias towards UK equities, held in the UK Equity Select Portfolio (27.6% of assets) weighed significantly on overall performance with a return of -27.0% over the worst quarter for the region’s stock markets since 1987. Elsewhere, smaller allocation to North American, European, Japanese and emerging market stocks also saw historic falls, in line with a challenging period for all equity markets.

As confidence in equity markets diminished over the period, investors’ appetite for risk decreased, which meant traditionally-considered safe-haven investments, such as government bond markets, buoyed. As a result, the fund’s allocation to the UK Gilts All-Stocks Tracker saw gains, which helped to counter the slight detraction felt by the weighting in corporate bonds as a result of poor liquidity over the period. The fund’s holdings in Cash gave a muted return of 0.0%, despite sterling falling in value against other major currencies.


27.6%

UK equities

Japanese equities

UK Corporate Bonds

UK Gilts


European equities

12.8%

12.4%

6.3%

5.1%

Cash


International Bond6.7%

4.8%

8.9%

15.4%


Page 12 of 14

Cautious Select PortfolioThe fund aims to invest in a mix of asset classes, companies, regions and fund managers, targeting an annualised standard deviation range of 6%-8% over a market cycle. Morningstar helps us select and manage the blend of funds it contains.

Fund3 months

(%)1 year

(%)3 years

(% per year)5 years

(% per year)

Cautious Select Portfolio -7.4 -2.6 -0.1 2.1








Index Linked 6.0 4.6 3.0 5.5


Cash 0.0 -0.2 -0.3 -0.4

Source: Financial Express. Produced by Aegon. Figures in £s, bid-to-bid basis, net of charges, with gross income reinvested to 31 March 2020. Fund launched on 26 September 2012. Past performance is no guide to future performance. The value of an investment may go down as well as up and investors may get back less than they invested. Please note: the funds shown below the blue line are the current components of the Cautious Select Portfolio as at 31 March 2020. However, these can change and the performance of the Cautious Select Portfolio takes these changes into account over the periods shown above.

Fund commentary, quarter one 2020 The Cautious Select Portfolio returned -7.4% over Q1 2020. The fund benefitted slightly over the other funds in the Select range from a bias to fixed income assets over the quarter. This was largely due to universal declines experienced by equity markets over the quarter, as investor sentiment turned away from riskier assets and towards more traditionally ‘safe haven’ markets. The UK Gilts All-Stocks Tracker and International Bond Select Portfolio, which make up 25.8% of the portfolio’s assets, both helped to boost performance with positive returns. Exposure to corporate bonds detracted amidst poor liquidity and fear of a credit crisis, while Cash (20.4% of the portfolio) came out flat at 0.0%, despite sterling falling in value against other major currencies over the period.

Elsewhere in equities, the fund felt the effects of the coronavirus (COVID-19) pandemic which led to historic market declines throughout the world. As a result, all equity components returned negatively and weighed on overall performance.


20.9%

UK equities

European equities

UK Gilts

UK Corporate Bonds

Index-Linked

Japanese equities

15.4% 10.4% 4.2%

20.4%



International Bond

Cash

15.5%

4.1%

3.2% 3.1% 2.9%


Page 13 of 14

Select Sector Portfolio asset allocation(as at 31 March)

The Select Risk Profile Portfolios are mainly made up from funds in our Select Sector Portfolio range. These are eight portfolios covering the major regions and asset classes and they’re carefully selected from our range, on recommendations from Morningstar, as what they believe is the best blend of funds in their respective sectors. The tables below show the current asset allocation of the Select Sector Portfolios that make up our Select Risk Profile Portfolio range.

Asian Equity Select PortfolioWeight

(%)

Pacific Ex-Japan Equity Tracker 25.4

SE Schroder Asian Alpha Plus 24.8

SE Fidelity Asia 24.7

SE Investec Asia ex Japan 15.0

SE Aberdeen Asia Pacific Equity 10.1

European Equity Select PortfolioWeight

(%)

Continental European Equity Tracker 30.0

SE BlackRock European Dynamic 20.4

SE Jupiter European Special Situations 20.1

SE Janus Henderson European Selected Opportunities

15.2

Aegon Schroder European Recovery 14.2

UK Equity Select PortfolioWeight

(%)

UK Index Tracker 34.8

SE Threadneedle UK Equity Income 15.2

SE Artemis Income 15.0

SE BlackRock UK Special Situations 14.9

Aegon Merian UK Smaller Companies 10.3

SE Artemis UK Special Situations 9.7

SE = Scottish Equitable

International Bond Select PortfolioWeight

(%)

Overseas Government Bond Tracker 34.2

Aegon BNY Mellon International Bond 27.6

Overseas Corporate Bond Tracker 20.6

SE Templeton Global Total Return Bond 17.5

Japanese Equity Select PortfolioWeight

(%)

SE Man GLG Japan Core Alpha 58.9

Japan Equity Tracker 41.1

North American Equity Select PortfolioWeight

(%)

North American Equity Tracker 39.7

SE Schroder US Mid-Cap 21.5

SE JPMorgan US Equity Income 21.1

SE Janus Henderson US Growth 17.7

UK Corporate Bond Select PortfolioWeight

(%)

SE Fidelity MoneyBuilder Income 28.3

SE Kames Investment Grade Bond 25.2

SE M&G Strategic Corporate Bond 19.4

SE Janus Henderson Strategic Bond 12.0

SE RLAM Corporate Bond 15.1

Global Emerging Markets Equity Select Portfolio

Weight (%)

Emerging Markets Equity Tracker 26.3

SE Lazard Emerging Markets 20.4

SE JPMorgan Emerging Markets 17.9

SE M&G Global Emerging Markets 14.5

SE Somerset Global Emerging Markets 11.1

SE Aberdeen Emerging Markets (blend) (Closed to new investors)

9.8

Important informationPlease note – we reserve the right to add, remove and replace funds within the Select Risk Profile Portfolios or alter weightings between funds with the aim of making sure they continue to meet their aims and objectives. This may affect the additional charges/expenses we disclose for the portfolios. We reserve the right to change these without prior notification. We’ll announce any changes on the ‘Fund changes and news' section of our website: www.aegon.co.uk/about-aegon/investments/fund-changes-and-news

Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 165548. An Aegon company. www.aegon.co.uk © 2020 AEGON UK plc

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Documents

For intermediaries Select Risk Profile Portfolios – quarterly investment report · 2020-06-10 · Page 3 of 14 About the Select Risk Profile Portfolios There are six funds in the