Workplace pension provider Smart Pension has announced a strong performance across its default investment funds in 2016.
The auto enrolment firm, which specialises in pensions suitable for small and medium sized businesses, has seen a growth of 19 per cent after costs for its Lifestyle Default 1 investment fund, in which the vast majority of members are invested.
The firm says the excellent performance is, in part due, to a strong global equity backdrop and a weak British Pound as well as effective diversification and risk management.
Andrew Evans, CEO and co-founder of Smart Pension, said:
" This is a strong investment performance, picked by experts with risk mitigation at the heart of the decision-making process. Our diversification has worked well to manage volatility through Brexit and an overlay of active management by trustees keeps us aligned with market movements. The strong performance of Lifestyle Default 1 in particular is extremely pleasing and out-performs the average rise of the FTSE 100 which was up by 14.4 per cent over the same period.
"Our mixture of holdings in Japan, the US and Europe have been boosted by a lower sterling exchange rate and out four investment funds have out-performed their benchmarks in 2016."
The life-styling nature of the firm's overall investment strategy seeks to reduce risk in line with members' proximity to retirement age. The remaining three funds performed in line with expectations and provided positive returns through 2016; Lifestyle Default 2 was up by 14 per cent, Lifestyle Default 3, up 8.5 per cent and Lifestyle Default 4 grew by 2.4 per cent.
Smart Pension is a fintech firm, which specialises in auto enrolment. Companies that choose Smart Pension, have access to a range of Legal & General Investment Management (LGIM) DC pension funds. Last year, LGIM took a minority stake in the digital pension platform, part of a move by LGIM to invest in high-achieving, innovative, British technology that has a positive impact on the wider UK economy. The firm's asset allocation move in November 2016 to include exposure to UK Gilts through the L&G General All Stocks Index Linked Gilt Trust has also had a positive impact on performance whilst providing some diversity in assets and reducing short term volatility of returns.
Smart Pension's Sharia investment option has also performed strongly returning circa 25 per cent before fees.
An estimated 801,000 small businesses are set to reach their staging date in 2017, more than doubling the number in the previous 12 months.
Smart Pension remains free to use for employers and guarantees to accept every employer and employee, a critical feature for the hundreds of thousands of smaller British firms that will need to offer a workplace pension to their employees over the next 18 months and ongoing for the foreseeable future.
Launched in 2015, Smart Pension exceeds £4bn in assets under management (AUM) and now serves over one million members and more than 70,000 employers. It is powered by Keystone, Smart’s global savings and investments technology platform.
Aquiline Capital Partners, Barclays, Chrysalis Investments, DWS Group, Fidelity International Strategic Ventures, J.P. Morgan, Legal & General Investment Management, Link Group and Natixis Investment Managers are all investors in Smart Pension.