Asset allocation quarterly review
The latest Towers Watson review of the economic assumptions underlying the optimised portfolios available through our platform has resulted in a revision to asset allocations this quarter.
Platform asset allocations
Towers Watson’s long term projected returns across all of the asset classes considered have risen slightly for the end of the fourth Quarter 2015. These increases in projected returns have led to very small overall changes in the asset allocations within the multi-asset optimised portfolios, across risk levels and investment products.
Alterations in projected UK cash returns have a tendency to influence projected returns on other assets such as equities and property. Expected cash returns have risen to 1.86% from 1.67% as UK interest rates are now expected to start to rise in coming years. Correspondingly projections for UK equity and commercial property have both increased by 0.2%, resulting in expected returns of 7.37% and 4.63% respectively. While, international Equity return expectations have increased by a smaller amount (0.13%) to 7.79%.
UK Government Bond (Gilts) expectations are influenced by current long bond yields, which increased towards the end of 2015. This has resulted in long term expected returns for UK Gilts increasing by 0.23% to 2.09% and alongside this a smaller increase in projected returns for corporate bonds by 0.17% to 3.3% has also been calculated.
The overall effect has been very small changes in allocations between the asset classes and minor changes between different product wrappers reflecting tax effects on projected returns. The most notable shift has occurred for risk levels 5 to 9, with a reduction in international equities, mostly in favour of UK equities, of between 1% and 4%.
View the current platform allocations.