Much has evolved over the last 20 years, and so have smoothed funds

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Cast your mind back to the early 2000s: Google and Amazon were new names, the dreaded Millennium Bug never materialised, Apple launched the first iPod, and the Euro was introduced. Technology, investing, and financial planning have all moved on over these last few decades – with smoothed manged funds being a good example. 

Today could be the moment to take another look at this way of managing volatility for clients on-platform and within a CIP (Centralised Investment Proposition).

 

A modern take on smoothing 

The dot-com bubble is long behind us. We’ve come through the Covid-19 pandemic, artificial intelligence is reshaping how we live and work, and smoothed funds now use simple, transparent formulas to target potential growth. 

Daily pricing supports more accurate valuations of each client’s investment, while withdrawals are not usually subject to MVRs (Market Value Reductions), offering a more predictable, dependable way to access invested money.

 

Smoothing in simple terms 

In a typical fund, such as an OEIC (Open-Ended Investment Company) or UT (Unit Trusts), the value simply reflects its underlying assets, rising and falling with normal market movements – you could think of this as an “unsmoothed” value. 

A smoothed fund operates differently. Usually structured as a multi-asset fund, it uses a consistent methodology to reduce the impact of day-to-day volatility, aiming to deliver a calmer journey for investors.

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How the Standard Life Smoothed Return Pension Fund works 

The Standard Life Smoothed Return Pension Fund is a multi-asset fund designed for people approaching retirement (within 5 to 10 years) or already retired. Its aim is to grow clients’ pension savings over the medium to long term while providing some shelter from short-term market swings. 

We set an Estimated Growth Rate (EGR) for the fund. Each day, the smoothed price of each unit will normally increase in line with the EGR and any smoothing adjustments, less the fund charge, with the aim of delivering a smoother path of investment returns over time. The EGR is set annually, using long-term forecasts for the fund’s underlying assets, and reviewed quarterly. 

These forecasts draw on our Capital Market Assumptions, calculated by a team of specialists within Standard Life's Policyholder Investment Office, helping ensure they remain grounded and realistic. 

 

Key benefits for advisers and clients 

Smoothed managed funds stand out for the control, predictability, reliability, and confidence they can offer investors – and for the quality of conversations they enable between advisers and clients, particularly in an environment of ongoing volatility. 

For the Standard Life Smoothed Return Pension Fund, key features include: 

• Predictability – clear expectations support positive, data-led and future-focused client discussions. 
• Integration - can be used with other funds as part of a blended investment solution 
• Price – the fund is priced at 0.80%, lower than the average OCF (Ongoing Charges Figure) of UK active multi-asset funds. 
• Actively managed – by Fidelity Investments, with a mix of active and passive funds 
• On-platform access – the fund is available exclusively on the Fidelity Adviser Solutions platform. 

 

Built for modern retirement planning 

The Smoothed Return Pension Fund is a natural fit within a CIP or CRP for appropriate clients and can be blended with other funds to enhance diversification. Its unit-linked structure offers transparency, making it easy to see both the diversified asset mix and how the smoothing engine works. 

With market volatility and wider uncertainty likely to persist, the benefits of a smoothed solution like the Standard Life Smoothed Return Pension Fund are more relevant than ever for clients approaching or in retirement. 

To find out more, speak to your dedicated sales contact or visit our website for full details.