Download pdf - The Generation Portfolio · Portfolio manager CJ Cowan Assistant portfolio manager Ian Jensen-Humphreys Portfolio manager Paul Craig Portfolio manager Hinesh Patel Portfolio manager

The Generation PortfolioInvesting for retirement income

UK: For retail clientsSingapore: For sophisticated investors only

2 The Generation Portfolio

Investing for retirement income 3

ContentsRetirement calls ________________________________________4

Retirement considerations _______________________________6

Inside the Generation portfolio ___________________________8

What are the risks? _____________________________________10

The investment team ___________________________________12

Glossary ______________________________________________13


Retirement callsRetirement offers new opportunities and challenges as the focus of your financial affairs shifts from your salary to your pension pot and other savings.

Generating an income to help support your lifestyle, while trying to safeguard your money against inflation and ensuring it lasts as long as you need it, becomes the most important objective.

The Generation portfolio is an investment solution that seeks to make the most of the opportunities, and tackle the challenges head-on.

– It is aimed at investors who are either approaching retirement, at retirement or part way through retirement.

– The portfolio can be used alongside other solutions, such as annuities, or as a stand-alone option and can be used across a range of investment products.

– Generation has been designed by the investment team at Quilter Investors, in collaboration with financial advisers, to give you more flexibility regarding how you use retirement savings to support yourself in your later years.

Pensions reforms Recent pension reforms offer far more control over how you can use the money you’ve saved for retirement.

A key change, in the UK for example, is that you no longer have to buy a traditional annuity, an insurance product that allows you to swap your pension savings for a regular income. While an annuity can provide a guaranteed level of income for the rest of your life, it is also an irreversible decision.

Although an annuity may still be the best option for some people, it may not offer the same level of freedom to those with a larger pension pot, to use their savings should their circumstances change.

The Generation portfolio forms what is known as a ‘drawdown’ solution for retirement. It allows you to remain invested in financial markets while drawing an income, while aiming to protect and grow your pension savings. It does not prevent you from buying an annuity later in life – and you have the flexibility to leave some or all of your remaining savings to loved ones.


Generation has been designed to give you more flexibility regarding how you use retirement savings.


What are my income needs? Retirement offers many people an opportunity to realise lifelong ambitions, such as travel or a part-time career. It is therefore worth considering what kind of income you may need and whether you would like the flexibility to receive different amounts at certain periods:

Essential income needs: – The minimum level of income to fund

your basic lifestyle

Desirable/additional requirements: – These could include travel, hobbies or

starting a business

Luxury/unexpected costs: – Healthcare costs, family emergencies

and celebrations

How much risk should I take with my money? All investments carry some level of risk. When deciding how much income you require and how your savings can match this, it is important to consider how much risk you would be prepared to take with your money. Taking greater risks offers the potential for higher rewards, but could trigger losses that might affect the size of your pot and limit your potential to draw income in the future.

While having flexibility in how and when you access your money is key, drawing too much from your funds can have adverse effects, especially when markets are falling. If you experience investment losses early in retirement, you will probably struggle to recover them later on .

Retirement considerationsEnsuring your income meets your retirement goals while lasting as long as you need it to.

Flexibility in how and when you access your money is key, but drawing too much from your funds can have adverse effects, especially when markets are falling.


Will I outlive my retirement pot? Many people underestimate how long they will live for, which means they could run out of money. It is important to generate a sustainable income as the money you’ve saved for retirement needs to provide you with an income for the rest of your life.

Will I be able to maintain my lifestyle? Having the ability to grow your pension pot is important to pay for both the finer things in life and also the essentials, whose prices tend to rise over time. Many people don’t realise how much inflation can eat into their savings, and therefore their income, if it doesn’t grow at the same pace as the cost of goods and services.

Changes in financial circumstances – leaving an inheritance While you may have an idea now about what sort of retirement solution you would like, it may change over time. For instance, you could remain invested in markets for a few years, drawing an income from your pension savings, before deciding to buy an annuity. If you are undecided about leaving an inheritance, you may want to retain the flexibility to change your mind later on.


The portfolio invests in a diverse range of funds and assets. This approach is known as ‘multi-asset,’ and is a way to spread risk and help cushion your money when financial markets are performing poorly.

As markets can move up and down at different times, the variety of financial assets means they shouldn’t all move in the same direction at the same time.

The portfolio invests primarily in funds, run by a range of fund managers, and also holds cash; property; commodities and investments that offer a fixed amount of interest, such as government and corporate bonds.

The portfolio aims to achieve returns above inflation, so your income keeps pace with prices. An inflation rate of 3.1% – the UK CPI 12 month average for the 10 years to 2019 – means you can lose almost a third of your purchasing power in a decade.* Source: Bank of England inflation calculator.

£150k – If a healthy couple that retires at age 65

with a £150k pension pot bought a joint life annuity linked to the retail price index (RPI) with a five year guarantee

50% – the annuity would drop in value by 50%

on the death of the annuity holder

£3,800 – it could initially pay out £3,800 a year

with annual increases linked to RPI*.

3.1% – But annual inflation of 3.1% would

reduce that figure,

£2,024.23 – in real terms, after 20 years to just

£2,024.23 a year.* Figures sourced from the Money Advice Service lifetime annuity comparison tool, based on the annualised monthly income in arrears from a joint life annuity.

Inside the Generation portfolio A risk targeted portfolio designed to help you meet your lifestyle goals


Investment risk is managed by attempting to mitigate the short-term risks posed by markets, while constantly monitoring the longer-term portfolio goals.

In times of market stress the managers can take short-term decisions to help guard against the risk of losses. If some financial markets decline, they can take a more defensive stance by shifting money into assets considered to be less risky and potentially limiting losses, although this is never guaranteed.

The managers establish trends and locate the best opportunities using analytical tools and experience, and then pick the fund managers who appear best-placed to take advantage.

Generation CPI + 3 Portfolio

EquityAsia Pacific (inc Japan) equity | Emerging markets equity | European equity Global equity | North American equity | UK equity

Fixed IncomeCorporate bonds | Emerging market debt | Government bonds | Other fixed income

AlternativesOther alternative (inc hedge funds) | Other equity | Private equity | Property

Cash


What are the risks?The portfolio invests in a diverse range of funds and assets in order to diversify your investment risk. And while the managers look to even out the peaks and troughs, we want to outline the other risks that come with multi-asset investing:


– The value of investments, and income from them, may go down as well as up and investors may not get back the amount originally invested.

– As the portfolio invests in bonds, the government or company issuer might not be able to repay either the interest or the original loan amount, so could default on the debt. This would likely lower the value of those investments.

– The portfolio can use derivatives – financial instruments that are, in effect, simply legal contracts between several parties, which derive their values from other underlying assets. The value of these instruments can be prone to greater price fluctuations than investments in company shares or bonds.

– Investments in bonds and other debt instruments, including derivatives, are subject to interest-rate risk. This means the value of these investments may go down if interest rates rise, and vice versa.

– The portfolio may invest in higher-yielding bonds, where the risk of the issuer defaulting is higher than in bonds offering lower yields issued by companies judged to have a better ability to repay their debts.

– Investments in emerging markets – economies that are progressing towards becoming advanced – can involve a higher degree of risk; for example, they may not be as well-regulated as developed markets such as the UK.

– The portfolio also holds investments in currencies other than sterling. Changes in exchange rates, therefore, will cause the value of these investments – and the income derived from them – to rise or fall.

– The CPI target is an estimate and not guaranteed. This target may be reviewed and modified, depending on prevailing market conditions.

Key considerations


Generation portfolio managers Ian Jensen-Humphreys and Sacha Chorley are the managers of the Generation portfolio, supported by the wider Quilter Investors investment team.

Ian Jensen-Humphreys Ian is manager of the Generation portfolios. He joined Quilter Investors in March 2020 from 7IM, where he was most recently deputy chief investment officer. He joined 7IM in 2016 as a senior investment manager, focusing on derivatives and alternatives within the multi-asset portfolios, and also co-managed the 7IM Real Return Fund.

Ian started his career at Goldman Sachs, where he spent 15 years specialising in risk management and portfolio hedging strategies, before joining Citigroup.

Sacha ChorleySacha is manager of the Compass portfolios, and manager on the Creation and Generation portfolios. He joined the business in 2011 and has played an important role in the development of the asset allocation and investment tools used across the multi-asset ranges. Prior to joining the business, he worked at Broadstone with their team of economists during the financial crisis, before moving into asset allocation and fund manager research.

Sacha is a CFA Charterholder and has a degree in Maths from the University of Bath. He has also completed the Chartered Alternative Investment Analyst (CAIA) qualification.

Next steps Planning your future finances can be daunting, but it is essential to make the best possible use of your pension pot in order to achieve your retirement goals. We recommend you work with your financial adviser to explore the areas touched on in this brochure to find out more about Generation, and discuss any further questions you may have.

Quilter Investors portfolio managers

Paul SimpsonChief executive and Head of Investment

Helen BradshawPortfolio manager

Stuart ClarkPortfolio manager

CJ CowanAssistant portfolio manager

Ian Jensen-Humphreys Portfolio manager

Paul CraigPortfolio manager

Hinesh PatelPortfolio manager

Rasmus SoegaardPortfolio manager

Sacha ChorleyPortfolio manager


Glossary 1. Alternatives Investments in asset classes other than company shares, bonds and cash.

2. Annuity A form of insurance or investment entitling you to a series of annual sums, typically for the rest of your life.

3. Bonds A type of investment in debt, where investors loan money in exchange for interest payments.

4. Consumer Price Index (CPI)

A measure of inflation constructed by using the price of a basket of goods and services.

5. Derivatives Financial instruments that are legal contracts between several parties, which derive their values from other underlying assets.

6. EquitiesShares in companies that represent ownership.

7. Fixed incomeInvestments under which the borrower/issuer is obliged to make payments of a fixed amount on a fixed schedule, such as government bonds.

8. Income drawdown Keeping your retirement savings invested in financial markets while taking an income, instead of purchasing an annuity.

9. Interest rate The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.

10. Investment fund An investment programme funded by shareholders that is professionally managed.

11. Individual savings account (ISA)

A savings account that protects investments from tax.

12. Self-invested personal pension (SIPP)

A pension plan where the holder can choose and manage the investments.

Planning your future finances can be a daunting business - but it is essential to maximise your options.


Important informationPast performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rates may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter Investors Limited (“Quilter Investors”), Millennium Bridge House, 2 Lambeth Hill, London, England EC4V 4AJ. Quilter Investors is registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543) but is not licensed or regulated by the Monetary Authority of Singapore (“MAS”).

This communication provides information relating to Quilter Investors Generation CPI+ 3 Portfolio (the “Fund”), which is a sub- fund of Quilter Investors Multi-Asset OEIC.

Quilter Investors uses all reasonable skill and care in compiling the information in this communication which is accurate only on the date of this communication. You should not rely upon the information in this communication in making investment decisions. Nothing in this communication constitutes advice or personal recommendation.

The Fund invests principally in other collective investment schemes. Your attention is drawn to the stated investment policy which is set out in the Fund’s prospectus.

Quilter Investors Multi-Asset OEIC is authorised by the Financial Conduct Authority as a non-UCITS retail scheme and can be distributed to the public in the United Kingdom. An investor should read the Key Investor Information Document(s) (“KIID”)

before investing in any sub-fund of Quilter Investors Multi-Asset OEIC. The KIID and the prospectus can be obtained from www.quilterinvestors.com in English.

The Fund is only notified as a restricted scheme by MAS and is not allowed to be offered to the Singapore retail public. This marketing document shall be construed as part of an information memorandum for the purposes of section 305(5) of the Securities and Futures Act, Cap. 289 of Singapore (the “SFA”). Accordingly, this marketing document must not be relied upon or construed on its own without reference to the information memorandum. This marketing document is not a prospectus as defined in the SFA and accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply.

This document has not been registered as a prospectus by the MAS, and the offer of the shares is made pursuant to the exemptions under Sections 304 and 305 of the SFA. Accordingly, the shares may not be offered or sold, nor may the shares be the subject of an invitation for subscription or purchase, nor may this marketing document or any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the shares be circulated or distributed, whether directly or indirectly, to any person in Singapore other than under exemptions provided in the SFA for offers made (a) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 304 of the SFA, (b) to a relevant person (as defined in Section 305(5) of the SFA), or any person pursuant to an offer referred to in Section 305(2) of the SFA, and in accordance with the conditions specified in Section 305 of the SFA or (c) otherwise pursuant to, and in accordance with, the conditions of any other applicable provision of the SFA.

Where the shares are acquired by persons who are relevant persons specified in Section 305A of the SFA, namely:

(a) A corporation (which is not an accredited investor (as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) A trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

the shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 305 of the SFA except:

(1) to an institutional investor or to a relevant person as defined in Section 305(5) of the SFA, or which arises from an offer referred to in Section 275(1A) of the SFA (in the case of that corporation) or Section 305A(3)(i)(B) of the SFA (in the case of that trust);

(2) Where no consideration is or will be given for the transfer;

(3) Where the transfer is by operation of law;

(4) As specified in Section 305A(5) of the SFA; or

(5) As specified in Regulation 36 of the Securities and Futures (Offers of investments) (Collective investment Schemes) Regulations 2005 of Singapore.

– Online For further information please visit www.quilterinvestors.com

– Discuss Contact your financial adviser to talk over your retirement planning options


Quilter Investors: expertly designed multi-asset solutions.

SK18071/220-0315/QIL-166-20/May 2020