Colonial First State/Sanlam Partnership

Australia’s evolving retirement landscape, brings opportunities and challenges to retirement planning. With a growing population now living longer, people have unique plans to make the most of their retirement years. Retirees often want a balance between earning an appropriate income from their investments and ensuring their funds last as long as they do.

Colonial First State is committed to providing the right investment solutions to help meet more clients’ needs.  As such, Colonial First State has partnered with the Sanlam Group (Sanlam) to form an alliance providing clients with an innovative investment solution designed to help minimise the impact of major market drawdowns and actively reduce portfolio volatility, while allowing dynamic participation in rising markets designed to manage the risk of investing in equities.

About Sanlam

Sanlam is a global financial services group based in South Africa, with offices in Europe, Asia, North America and Australia. Established in 1918, Sanlam manage over US$65 billion in AUM and have a market cap of over US$13 billion. Sanlam’s Global Investment Solutions division provide individual and institutional clients access to a comprehensive range of specialised investment and risk management expertise. Sanlam specialise in solutions that help manage the risk of investing in equities, creating strategies that seek to capture upside potential while minimising losses due to unexpected movements in the market. Sanlam has partnered with Milliman, who act as a sub-adviser. Milliman has a 16 year track record in providing their risk management services for some of the world’s largest insurance companies.

Introducing the Sanlam Managed Risk Funds

Together, Colonial First State and Sanlam have introduced the Sanlam Managed Risk Funds into the Australian retail market. The Funds feature a passive equity investment with a dynamic risk management overlay. The risk management overlay has allowed Sanlam to leverage Milliman’s institutional capabilities and provide these services to retail clients. Colonial First State has partnered with Sanlam in order to capitalise on their experience with this kind of product in the retail market. Sanlam have a proven track record in applying institutional thinking and risk management techniques at the retail client level to help investors plan and adjust to retirement as effectively as possible.

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How the Sanlam Managed Risk Funds work

The Funds use a systematic risk management process that removes the human emotion that can affect investment decisions. Futures are used as a hedge so that when markets fall, the value of the futures rise, offsetting some of the losses and volatility associated with market declines. The Funds allow pre-retirees who are subject to sequencing risk, or the risk of a decline in their retirement portfolio closer to retirement, to remain invested knowing that their investment will be subject to a risk management process designed to reduce volatility and mitigate the risk of major losses during market downturns. The Funds are also particularly suitable for those in retirement who need their retirement savings to last and that want the opportunity to access dividends but are unwilling to take on the inherent risks associated with equity markets.

The Funds aim to provide a similar return to equity markets but with a much smoother return path, giving clients the confidence and peace of mind to stay invested, even when markets are unstable. The Funds are subject to risk and there is no guarantee of principal or performance. 

Disclaimer

This article is intended to provide general information for the adviser only. It is not financial product advice and does not take into account the individual objectives, financial situation or needs of any individual investor. Investors should read the Product Disclosure Statement (PDS) available at colonialfirststate.com.au or by contacting Adviser Services on 13 18 36, and consider talking to a financial adviser before making an investment decision. The Sanlam Managed Risk Funds are distributed through and offered by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State). Colonial First State is a subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 ('the Bank'). The Bank and its subsidiaries do not guarantee the performance of Colonial First State's products or the repayment of capital by Colonial First State. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.

This article is based on its understanding of current regulatory requirements and laws as at 23 September 2015. While all care has been taken in the preparation of this article (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any other member of the Commonwealth Bank of Australia group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. Neither Sanlam Private Wealth Pty Ltd ABN 18 136 960 775 AFSL 337927 (Sanlam) nor Colonial First State Investments Limited ABN 98 002 348 352 AFSL 232486 (Colonial First State) make any representations that products or services described or referenced herein are suitable or appropriate for an investor. This information is given without any liability whatsoever to Sanlam or Colonial First State or any of their related entities.