Fund changes

Here you can keep up to date, and find everything you need to know about changes to our funds. This could be, for example, a change to a fund’s objective, risk rating or charges; or a change to the investment adviser, the fund’s name or underlying investment approach.

What's changing in 2019?

We’re proposing to merge our seven Solution funds in the Scottish Widows Investment Solutions Funds ICVC (Investment Company with Variable Capital) into the Investment Portfolio ICVC. Both ICVCs are currently managed by Scottish Widows Unit Trust Managers Limited (SWUTM). SWUTM is the Authorised Corporate Director (ACD) for both of the ICVCs.

By the end of 2019, we aim to move the management of the Solution funds to a new joint venture between Lloyds Banking Group and Schroders plc. Scottish Widows is part of Lloyds Banking Group.

Why are we proposing to merge the funds?

We want to merge these funds to allow us to move the management of the Solution funds to a new company by the end of 2019. To do this, we need to move the Solution funds into the Investment Portfolio ICVC, which will then move across to the new company, subject to Financial Conduct Authority (FCA) approval.

This change won’t affect how the funds are managed, their objectives or policies. The new Solution funds will mirror the existing Solution funds. There are some key differences so it’s important that you read the Voting Document which contains details.

You can find a copy of the Voting Document for each fund, a Prospectus and Key Investor Information Document (KIID) in the document library.

These documents are for information only. Please note that the Key Investor Information Documents are for the new corresponding funds.

Why do we want to move the ICVC to a new company?

Lloyds Banking Group have entered into a new joint venture with Schroders plc, called Schroders Personal Wealth, which continues our commitment in developing new capabilities to support you with your investments and financial planning. This joint venture brings together Lloyds Banking Group’s multi-channel and digital capabilities with Schroders’ strengths in active asset management and platform technology.

This joint venture aligns the expertise of Schroders Personal Wealth in portfolio construction, and the investment management strength of Schroders Investment Management, in providing adviser services to multi-asset funds.

Schroders is a global asset and wealth manager, who delivers a broad range of investment strategies designed to meet the diverse needs of investors. They are focused on providing investment solutions for wealth customers.

We believe that the investment capability and development of wealth management solutions that Schroders Personal Wealth provide will be beneficial in generating future returns for investors.

The Extraordinary General Meetings (EGMs) for each fund will take place on 29th August 2019 and we’ll publish the results from the 30th August 2019.

What will happen if the vote is successful?

If our investors vote in favour of this proposal then, subject to FCA approval, the management of the Investment Portfolio ICVC will move to the joint venture and it will sit under a new ACD. We’ll send you more information about this before the ICVC is moved to the new ACD, in accordance with FCA requirements.

What is the proposed change

If approved by our industry regulator, the Financial Conduct Authority, the Investment Portfolio ICVC is going to move to a new fund manager.

The Managed Growth Funds are currently sub funds of the Investment Portfolio ICVC. The aim of the proposal is to keep those Funds under the management of Scottish Widows Unit Trust Managers Limited (SWUTM).

To keep the Managed Growth Funds under SWUTM’s management, it’s necessary to merge the Managed Growth Funds into new corresponding funds within the Scottish Widows Investment Solutions Funds ICVC. The Investment Portfolio ICVC will then move to its new fund manager.

Why are we proposing to merge the funds?

Lloyds Banking Group (LBG) have entered into a new joint venture (JV) with Schroders plc. The JV is targeted towards high net worth individuals with an adviser actively providing investment advice. As the Managed Growth Funds were designed to support LBG Retail customers using a non-advised online product we believe that SWUTM is best placed to maintain the Managed Growth Funds going forward and provide continuity for investors.

If this goes ahead, the merger won’t alter your investment. It won’t affect how the funds are managed, or change the Funds’ objectives or policies.

There will be no changes to the asset allocation, charges or risk profile of your investment, as a result of the fund merger. The merger will not be treated as a disposal for tax purposes, meaning you’ll not be liable to pay any Capital Gains Tax as a result of the merger. The tax treatment of your investment will be unchanged.

More detail is given in the copy of the Voting Document.

You can find a copy of the Voting Document, a Prospectus and the Key Investor Information Document (KIID) in the document library.

These documents are for information only. Please note that the Key Investor Information Documents are for the new corresponding funds.

Minster Nominees Limited (Minster), who is the Nominee Company for these Funds, will receive all customers’ expression of intent and then vote at the Extraordinary General Meetings (EGMs) for each fund which take place on 29th August 2019. We’ll publish the results from the 30th August 2019.

The Financial Conduct Authority, the regulator of the asset management industry, has set new standards for disclosure of fund objectives and identified other changes to help investors’ understanding and ability to compare fund performance.

Following this, we’ve reviewed our funds’ objectives and policies and we’re making updates to add clarification on the funds’ strategies, the assets they hold and how the funds seeks to achieve their objective.

Where a fund has a benchmark (the index against which the performance of the fund is measured), we’re making that clear in the fund’s objective. For other funds which don’t have a benchmark index, we’re suggesting an Investment Association sector of similar funds which can be used to compare performance.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.

We’re replacing Aberdeen as the Investment Adviser to most of our funds. Our actively managed funds, where the Investment Adviser seeks to add value by making decisions on which investments to buy, sell or hold will move to Schroders. The Halifax Ethical fund’s Adviser will be Hermes Investment Management.

We believe these appointments will benefit you through the prospect of improved future performance. The funds will continue to be managed within their existing risk profile.

The new Investment Advisers will take on the relevant funds over a period of time from the end of September 2019. Aberdeen will continue to manage our passive and property funds until April 2022. Acting within a set of restrictions specified and monitored by us, they’ll be responsible for the day-to-day asset management of these funds with the aim of achieving the funds’ investment objectives.

Scottish Widows will retain ownership of these funds and will remain responsible for defining the investment objectives and policies, determining the Investment Advisers’ performance targets and the strict parameters on how they should be run. Their performance will be regularly monitored.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.

What’s changing?

The change of Investment Adviser will apply to a number of Scottish Widows and Halifax funds.

We expect the new Investment Advisers will change some of the assets currently held within the actively managed funds to reflect their views of assets in the funds, economic forecasts and the market.

Changes to assets within the actively managed funds will result in a short-term increase in transaction costs to the funds, however, these will be capped and monitored by us in order to limit their impact on short-term performance. More information on transaction costs and the limits that apply can be found below.

There won’t be a change to the funds’ annual management charges.

Transaction costs

Transaction costs may increase in the short-term for some of the actively managed funds as investments are bought and sold with the aim of generating higher returns.

Read more

Thinking of cashing in?

We recognise that you may have an immediate need to cash in some or all of your investment in a fund and may have questions about the impact of transaction costs on short-term fund performance.

Read more

Q&As

We’ve answered here questions you may have about this change.

Read more

We’re replacing Aberdeen as the Investment Manager of most of our funds. Our actively managed funds, where the Investment Manager seeks to add value by making decisions on which investments to buy, sell or hold will move to Schroders, with the exception of the HBOS Ethical OEIC (including the Clerical Medical Ethical, Clerical Medical Evergreen and Halifax Ethical life and pension funds which invest in the OEIC), which will move to Hermes Investment Management.

We believe these appointments will benefit you through the prospect of improved future performance. The funds will continue to be managed within their existing risk profile.

The new Investment Managers will take on the relevant funds over a period of time from the end of September 2019. Aberdeen will continue to manage our property and tracker funds until April 2022. Acting within a set of restrictions specified and monitored by us, they’ll be responsible for the day-to-day asset management of these funds with the aim of achieving the funds’ investment objectives.

Scottish Widows will retain ownership of these funds and will remain responsible for defining the funds’ aims, determining the Investment Managers’ performance targets and the strict parameters on how they should be run. Their performance will be regularly monitored.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.

What’s changing?

The change of Investment Manager will apply to a number of Scottish Widows, Halifax and Clerical Medical funds.

We expect the new Investment Managers will change some of the assets currently held within the actively managed funds to reflect their views of assets in the funds, economic forecasts and the market.

Changes to assets within the actively managed funds will result in a short-term increase in transaction costs to the funds, however, these will be capped and monitored by us to limit their impact on short-term performance. More information on transaction costs and the limits that apply can be found below.

Your fund or funds within your unit-linked savings policy, protection plan, bond, endowment or pension plan may invest directly in assets, or indirectly through another fund (such as one of our OEIC funds), or through a range of funds for a multi-asset portfolio. If the fund invests directly in assets or via one of our OEIC funds then there may be a short-term increase in transaction costs to the fund. If the fund is a multi-asset portfolio fund which invests in several other funds, then only some, or even none, of these underlying funds may be affected by this change. Where this is the case, the fund will bear minimal or no increase in transaction costs. If you’d like to understand how you’re invested you can call us.

There is also no change to external funds managed by third party fund managers, other than Aberdeen.

Example of the effect on a multi-asset portfolio fund

Example of the effect on a multi-asset portfolio fund

We’re currently assessing all of the Aberdeen-owned funds we invest in on a fund-by-fund basis and we’ll update this page with key information as the changes are made.

Some of our multi-asset funds, invest in a tactical asset allocation (TAA) fund managed on our behalf by Aberdeen. TAA involves adjusting the long-term asset allocation within a portfolio to capture shorter-term relative value opportunities in markets. Schroders will take over the management of this underlying tactical asset allocation fund in Q1 2020.

What’s not changing?

There won’t be a change to the funds’ annual management charges.

Our Governed Investment Strategies (GIS) and Pension Investment Approaches (PIA) also won’t change. GIS and PIA regularly rebalance and gradually move your pension into lower risk investments as you approach your selected retirement date.

Our Scottish Widows’ investment specialists will continue with long and medium-term strategic asset allocation for a number of Scottish Widows funds and portfolios to determine the optimal mix of asset classes, based on the expected return of those asset classes over five years and longer.

Transaction costs

Transaction costs may increase in the short-term for some of the actively managed funds as investments are bought and sold with the aim of generating higher returns.

Read more

Thinking of cashing in?

We recognise that you may have an immediate need to cash in some or all of your policy or pension plan, and may have questions about the impact of transaction costs on short-term fund performance.

Read more

Q&As

We’ve answered here questions you may have about this change.

Read more

Further information

Independent advice

If you’re unsure about how any of these changes may affect your investments, we recommend that you speak to an independent adviser. If you don’t have an adviser you can find one at unbiased. Remember a financial adviser may charge for any advice they give.

You can find free and impartial money guidance from the government at www.moneyadviceservice.org.uk or by calling free:

0800 138 7777

Monday to Friday from 8am to 8pm, and Saturday from 9am to 1pm.

Glossary

It’s difficult to avoid jargon in financial services, so you may have come across some unfamiliar expressions. We’ve explained them here.

See glossary

Document library

View all documents relating to the fund changes.

Visit library