Old Mutual Guaranteed Fund continues to grow retirement savings despite difficult markets
Old Mutual has declared a gross bonus of 6% on its Guaranteed Fund for the period 1July2009 to 30 June 2010 – comfortably ahead of the inflation rate of 4.2% for the year. This is the 44th consecutive year of positive returns declared by the group’s longest running Smoothed Bonus Fund for institutional investors.
Roger Birt, Head of Guaranteed Investment Portfolios at Old Mutual Corporate says the bonus rate gives testimony to an improvement in market performance over the last year, with the reserves for the Guaranteed Fund recovering well from levels a year ago, and the final bonus being more than double the bonus rate of 2.5% declared in June 2009.
“While investors have earned a reasonable return for the year, above inflation, investment markets continue to be uncertain. We therefore remain focused on prudent consideration of the future economic and market outlook when declaring bonuses.”
According to Birt, the last three years have been difficult for investment markets, with most investments delivering annualised returns in the single digits.
The local stock market has delivered no return since June 2007, contributing to the average performance from large global balanced funds being only 2.8% per annum over the last three years1. Like the Guaranteed Fund, Absolute Return Funds also promote downside protection, and the average of fifteen funds comparable to the Guaranteed Fund in terms of return expectation delivered 5.2% per annum over the last three years2. In comparison, the Guaranteed Fund has delivered 7.1% per annum over the same time period.
“It is during periods such as these that retirement savings invested in the Guaranteed Fund continue to grow well, underpinned by our policy of furnishing stable returns in any market environment,” says Birt. “At the same time, the Guaranteed Fund strategy of maintaining favourable longer term performance removes the risk of shifting investment strategies in times of fear and panic.”
Old Mutual has declared an interim bonus rate on the Guaranteed Fund for the year 1 July 2010 to 30 June 2011 of 4% (gross of fees).
Absolute Return Manager Watch Survey for the month ending June 2010 (managers targeting headline CPI plus 5%)
