December 2017 update – Review to September 2017
The latest Willis 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.
Over the quarter there was a modest increase in the expected returns of UK cash, UK fixed interest, UK equity, and property. There was a small decrease in the expected return of international fixed interest, and no change for international equities. Long-term volatility was broadly unchanged across all the asset classes.
Long-term expected returns for UK fixed interest increased to 1.69% p.a. from 1.57% p.a. The expected returns for this asset class are influenced by current UK long bond yields, which increased during the quarter.
The projected cash return forecasts have a tendency to influence projected returns on other assets such as equities and property. Over the quarter the expected long-term returns for UK cash increased to 1.60% p.a. from 1.54% p.a. and the expected return for UK equity increased to 6.68% p.a. from 6.62% p.a. The expected return for UK commercial property also increased to 4.44% p.a. reflecting the increase in forecast UK cash returns.
Over the quarter most of the optimised portfolios showed little change generally although, for some, there were small moves from cash to UK equity.
View the standard asset allocations as at December 2017