ClockWise: Introducing GMAP Moderate Growth

We expanded our multi asset range for sterling-based investors last week with the launch of Royal London Global Multi Asset Portfolios (GMAPs) Moderate Growth, a fund designed for investors tracking a Defaqto 4 risk rating or its equivalent.

Our aim is to help advisors wishing to use the GMAPs as a Centralised Investment Proposition by ensuring we have all of the most popular customer risk buckets covered. The new fund sits at the centre of the risk mapped range, between GMAP Balanced and GMAP Growth (Chart 1).

Chart 1: The GMAP range

Source: Royal London Asset Management for illustrative purposes only. The numbers within each donut represent the equivalent Governed Range portfolio with the same strategic mix as the respective GMAP.

*Fund name changed from Royal London GMAP Conservative Fund on 15 March 2024.
**Fund name changed from Royal London GMAP Dynamic Fund on 15 March 2024.
*** The Royal London GMAP Moderate Growth Fund launched on the 25 July 2024.

The GMAPs were launched in 2016 to allow third party platform access to strategies similar to the Royal London Governed Portfolios, a popular risk-targeted pension proposition, with the same asset mix and investment process managed by the same team. The new Moderate Growth fund is the platform equivalent of the existing Governed Portfolios 2 and 9. The launch of the GMAP Moderate Growth fund means eight of the nine Governed Portfolios are covered by equivalent GMAP funds.

Chart 2: Eight of the Royal London Governed Portfolios (GPs) are now covered by equivalent GMAP funds

Past performance is not a guide to future performance.
Source: RLAM, for illustrative purposes only. Shaded GPs correspond to funds also available as GMAPs.

The funds were designed with the common purpose of maximising the long run return after inflation for differing levels of risk. Our broadly diversified and active approach has proved resilient in the volatile post-Covid period when compared to traditional balanced funds which invest only in stocks and bonds. We believe that inflation resilience is improved by including assets such as commodities and commercial property, along with a greater allocation to UK equities than a simple market capitalisation approach would imply.

The strategic mix of the GMAP Moderate Growth fund is shown below.

Chart 3: GMAP Moderate Growth Strategic Asset Mix

Source: RLAM.

As with other GMAP and Governed Range funds, we will manage exposures actively on a day-to-day basis making use of our proprietary Investment Clock model linking the performance of different asset classes to the ebb and flow of the global business cycle – an approach that has added value. 

This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.

RL GMAP Funds – Risk warnings

Investment Risk: The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested.

Credit Risk: Should the issuer of a fixed income security become unable to make income or capital payments, or their rating is downgraded, the value of that investment will fall. Fixed income securities that have a lower credit rating can pay a higher level of income and have an increased risk of default.

Derivative Risk: Derivatives are highly sensitive to changes in the value of the underlying asset which can increase both Fund losses and gains. The impact to the Fund can be greater where they are used in an extensive or complex manner, where the Fund could lose significantly more than the amount invested in derivatives.

EPM Techniques: The Fund may engage in EPM techniques including holdings of derivative instruments. Whilst intended to reduce risk, the use of these instruments may expose the Fund to increased price volatility.

Exchange Rate Risk: Changes in currency exchange rates may affect the value of your investment.

Interest Rate Risk: Fixed interest securities are particularly affected by trends in interest rates and inflation. If interest rates go up, the value of capital may fall, and vice versa. Inflation will also decrease the real value of capital.

Emerging Markets Risk: Investing in Emerging Markets may provide the potential for greater rewards but carries greater risk due to the possibility of high volatility, low liquidity, currency fluctuations, the adverse effect of social, political and economic instability, weak supervisory structures and accounting standards.

Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

Fund investing in Funds Risk: The Fund is valued using the latest available price for each underlying investment, however it may not fully reflect changing stock market conditions and the Fund may apply a ‘fair value price’ to all or part of its portfolio to mitigate this risk. In extreme liquidity conditions, redemptions in the underlying investments, and/or the Fund itself, may be deferred or suspended.

Liquidity and Dealing Risk: The Fund invests indirectly in assets that may at times be difficult to value, harder to sell, or sell at a fair price. This means that there may be occasions when you experience a delay in being able to deal in the Fund or receive less than may otherwise be expected when selling your investment.