March 2018 update – Review to December 2017
The latest Willis 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 a modest decrease in the expected returns for UK cash, UK & international fixed interest, UK equity, and property. There was also a small increase in the expected returns for international equities. Long-term volatility was broadly unchanged for most asset classes, other than a drop for UK equity from 18.78% p.a. to 17.75% p.a. and an increase for UK fixed interest from 7.55% p.a. to 7.96% p.a. Long-term expected returns for UK fixed interest fell from to 1.69% p.a. to 1.50% p.a. The expected returns for these asset classes are influenced by current UK long bond yields, which decreased 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 fell to 1.50% p.a. from 1.60% p.a. The projected expected return for UK equity fell from 6.68% p.a. to 6.57% p.a. The projected expected returns for UK commercial property also fell to 4.33% p.a., reflecting the decrease in forecast UK cash returns.
Over the quarter the optimised portfolios showed little change, hence for this quarter we have decided to make no changes to the previous allocations.
View the standard asset allocations as at March 2018