This site is for financial advisers only, Click here for the consumer site.


Potential returns – Spectrum funds

The table below demonstrates the range of annual ‘expected returns’ for Spectrum risk levels 3 to 8 and the average of all possible returns within the range of each risk level. (Research by Old Mutual Global Investors has shown that Spectrum risk levels 3 to 8 encompass approximately 95% of investors’ portfolios.)

Strategic asset allocation uses a mathematical formula to produce the best possible combination of assets to achieve the investor’s goals over the life of the investment.

Individual investment asset classes are combined into a bespoke investment portfolio via a process known as Mean Variance Optimisation. This process is an integral part of Modern Portfolio Theory which uses expected rates of return and implied volatility for each asset class. The aim is to optimise the asset allocation so as to achieve the highest expected level of return for a given level of risk on Old Mutual Wealth Risk Profiler.

Spectrum potential returns March 2014

Source: Old Mutual Global Investors, Figures as at 31 March 2014.

The figures should not be taken as a projection of the likely returns from the Spectrum funds. They show the implied volatility and mean expected return of Spectrum funds to two standard deviations. Projections to two standard deviations means that returns are expected to be between these extremes in 95 years out of 100. This is often described as a 95% confidence level.

The figures shown are the expected arithmetic average returns. The ranges assume that returns are based on a log normal distribution.

Figures are shown net of tax and underlying manager fees and of the Old Mutual Global Investors Annual Management Charge (AMC).

Financial Adviser Verification