Industry Voice - Diversified growth funds: The asset allocation all-rounders
MAINTAINING A BETTER BALANCE
Diversified Growth Funds (DGFs) take a range of approaches as broad as the name suggests. At the passive end of the spectrum, they can be packaged exposures to a pre-set asset allocation with minimal active management, in terms of asset allocation or security selection. At the other end of the spectrum, they can resemble hedge funds in the range and complexity of strategies they offer. In between, DGFs can have various levels of active security selection and asset allocation combined with strategic market exposures.
Depending on their particular flavour, DGFs will have different roles in a pension portfolio. The JPMorgan Life Diversified Growth Fund offers investors access to an actively managed, low-cost multi-asset solution (see Exhibit 1). We identify our DGF as a "core" strategy, investing for long-term growth across a broad range of asset classes while offering daily liquidity to clients. This article describes the potential benefits of our DGF in the context of UK pension plans, both defined contribution (DC) and defined benefit (DB). We also describe and seek to quantify some of the long-term risks that may arise from the active asset allocation process.
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Life funds are provided by JPMorgan Life Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England No: 185175. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP. LV-JPM52306 | 09/19 | 0903c02a826accae