June 2018 update – Review to March 2018
The latest Willis Towers Watson review of the economic assumptions underlying the optimised portfolios available through our platform has currently resulted in no revisions to asset allocations.
Over the quarter there were increases in the expected returns for UK cash, UK & international fixed interest, UK & international equities, and a more modest increase in property. Long-term volatility fell slightly except for UK and international equities that moved slightly upward from 17.75% p.a. to 17.78% p.a. for UK equities, and from 19.61% p.a. to 19.65% p.a. for international equities. Long-term expected returns for UK fixed interest rose from 1.50% p.a. to 1.75% p.a. The expected returns for these asset classes are influenced by current UK long bond yields, which decreased during the quarter.
The projected UK 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 rose from 1.50% p.a. to 1.78% p.a., the projected expected return for UK equity rose from 6.57% p.a. to 6.87% p.a., and the projected expected returns for UK commercial property rose slightly from 4.33% p.a. to 4.40% p.a.
Over the quarter the optimised portfolios again showed little change, so there are no changes recommended to the previous allocations.
We are currently undergoing a review of the expense and tax assumptions, so this could alter allocations at the next review
View the standard asset allocations as at June 2018