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Scottish Life, the pensions specialist arm of Royal London, will switch to Franklin UK Mid Cap fund for the underlying investments of Scottish Life UK Mid Cap Specialist Pension fund, from the present Schroder UK Mid 250 fund. From 14 November, the underlying investments of Scottish Life US Core Plus Pension fund will also change to Fidelity American from Investec American.
The Scottish Life US Core Plus Pension funds and UK Mid Cap Specialist are part of a group of externally managed equity funds that are benchmarked relative to predefined risks and categorised by sectors.
“We take a proactive role in the governance of our investment fund range, with regular reviews of the investment objectives, performance and benchmarks, and we make changes when necessary,” said Lorna Blyth, investment marketing manager at Scottish Life.
“We have taken the decision to replace the Schroder UK Mid 250 fund following a sustained period of underperformance and concern that the size of the underlying fund had increased to such an extent that it was likely to have a negative impact on performance relative to its market sector,” she added.
Ms Blyth said the Investec American Fund has also become more volatile relative to its benchmark and had underperformed over a prolonged period of time.
“Both the Franklin UK Mid Cap fund and the Fidelity American fund have long track records of strong performance and we believe that in each case the manager’s style and process are better suited to delivering consistent performance in varying market conditions,” she said.
“We have designed the process of replacing an underlying fund to be a seamless transition. And we are communicating the changes to advisers and policyholders well in advance so they can be confident that we continually monitor the fund range and make adjustments when we feel it is necessary,” she observed.