March 2020 update – Review to 31 December 2019
The latest Towers Watson (WTW) parameter review of the economic assumptions underlying the optimised portfolios available through our platform has resulted in some revision to asset allocations this quarter.
Over the quarter there was an increase in the expected returns across all asset classes (UK cash, UK and international fixed interest, UK and international equity and property). Ten year expected returns for cash rose to 1.40% p.a. from 0.84% p.a., and these influence projected returns on other assets such as equities and property. The projected expected return for UK equities rose to 6.52% p.a. from 5.93% p.a. The projected expected returns for UK commercial property also rose to 4.81% p.a. from 4.24% p.a.
- UK cash: 10 year returns have risen by 0.56% pa. Expected volatility increased by 0.10%.
- UK fixed interest: 10 year returns have risen by 0.24% pa. Expected volatility decreased by 0.15%.
- International fixed interest: 10 year returns have risen by 0.30%.
- UK equity: 10 year returns have risen by 0.59% pa. Expected volatility increased by 0.10%.
- International equity: 10 year returns have risen by 0.35% pa.
- UK property: 10 year returns have risen by 0.57% pa.
We have generally seen minor changes in the optimised asset allocations albeit with a slight increase in property and UK equities and a decrease in cash and international equities across the optimised portfolios.
View the standard asset allocations as at March 2020