December 2018 update – Review to September 2018
The latest Towers Watson review of the economic assumptions underlying the optimised portfolios available through our platform has resulted in no revisions 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). Long-term volatility was broadly unchanged for all asset classes.
Ten year expected return for cash rose from 1.72% p.a. to 1.90% p.a., and these have a tendency to influence projected returns on other assets such as equities and property. The projected expected return for UK equity rose from 6.80% p.a. to 6.99% p.a. The projected expected return for UK commercial property also rose from 4.33% p.a. to 4.52% p.a. before a 0.5% p.a. deduction for extra expenses and liquidity constraints.
With such little change in the relative return of each asset class over cash, and virtually no change in volatility, over this quarter the optimised portfolios showed negligible change. Hence, for this quarter, we have decided to make no changes to the previous allocations. Therefore the assumptions from 30th June 2018 have been carried over.
View the standard asset allocations as at December 2018