Passive

By establishing a bespoke relationship with Vanguard, we are able to offer an innovative range of unbiased globally diversified actively allocated passive investment solutions.

What we offer

In collaboration with Vanguard, we have built five risk-rated passive portfolios. The equity and fixed income building blocks of which have been designed to provide significantly diversified exposure to global markets and assets.

This combined with an adaptive asset allocation process that adjusts as the long-term outlook for equities and bonds evolves enables us to provide unbiased actively allocated passive investment solutions for a range of investor risk appetites.

Vanguard are one of the world’s leading exponents of passive investment management with over $7 trillion (Vanguard, as at 31st March 2023) in assets under management and a client base spanning 30 million worldwide – our bespoke relationship with Vanguard will be the first of this nature in the UK.

Balancing risk and reward

Whilst our Investment Committee has set the investment parameters and objectives for our five passive model portfolios their bespoke composition is driven by Vanguard’s two proprietary in-house modelling and financial simulation engines: the Vanguard Capital Markets Model (VCMM) and the Vanguard Asset Allocation Model (VAAM).

The VCMM and VAAM work in tandem to determine annual asset allocations, which are time-varying based on the forecasts generated for expected market risk and return.

The VCMM generates forecasts for a range of asset classes based on thousands of potential economic and market scenarios – launched in 2008 it has been continually enhanced with oversight from a dedicated team within Vanguard’s Investment Strategy Group.

The forecasts take into account macro/financial risk factors as well as expected returns by asset class and are complemented by qualitative oversight by  Vanguard and ultimately by our Investment Committee who set the risk framework for the portfolios.

Asset Allocation

Our Investment Committee has set the investment parameters and objectives so there is no specific home-bias to the UK or any other country or region in terms of the equity and fixed income building blocks.

The VAAM determines the optimum blend of these building blocks to ensure our asset allocation offers the desired risk and return characteristics, based on the assumptions generated by the VCMM.

The target asset allocations for the five portfolios are set annually, however in the event of an extreme market disruption, Vanguard will review the allocations to determine if an off-cycle update is necessary – the portfolios will be rebalanced back to target weight every three months in any event.

Unlike our active portfolios our passive portfolios will exclusively utilise Vanguard’s range of institutional index funds thereby providing a significant level of diversification across the equity and fixed income components – which where appropriate are hedged back to sterling.

Highly diversified portfolios

Five model portfolio options are available to match an investor’s attitude to risk, which can be blended if preferred. The portfolios are highly diversified and spread risk by investing across different regions and asset classes.

VANGUARD ASSET MANAGEMENT