REASONS WHY - OLD MUTUAL
SPECTRUM FUNDS
This document is designed for use by professional financial advisers only and should not be relied upon by
existing or prospective clients of Old Mutual Wealth.
To help in the preparation of marketing material and ‘Reasons Why’ letters, we’ve prepared the following
suggested factual statements to help you communicate to your clients the benefits of investing in the
Spectrum Funds.
It is the responsibility of the individual professional financial adviser to ensure that any ‘Reasons Why’ letters
prepared for investors fully comply with all regulatory requirements.
ABOUT OLD MUTUAL SPECTRUM FUNDS
Spectrum is an innovative range of risk-targeted funds that bring greater precision to the management of
your investment portfolio by carefully matching the appropriate fund with the level of risk acceptable to
you.
Risk profiling (identifying a person’s capacity for loss) is an essential part of providing quality investment
advice and ensures that an investment is appropriate for your desired risk profile. By using the pioneering
Old Mutual Wealth Risk Profiler your appetite for risk can be calculated by way of a risk score. The
Old Mutual Wealth Risk Profiler has been developed in conjunction with leading investment consultancy
Towers Watson*. The Old Mutual Wealth Risk Profiler asks carefully constructed questions to quantify the level
of risk you are willing and able to take. This will produce a risk score from 1 to 10, with 1 being the most risk
averse and 10 meaning you are prepared to take the highest risk with your money. Approximately 95% of
investors have a risk score from 3 to 8. Old Mutual Wealth therefore offers six Spectrum Funds, each with a
slightly different mix of assets, to cater for these most common attitudes to risk.
The answers you provided within the Old Mutual Wealth Risk Profiler questionnaire indicated you have a risk
profile of [x]. I have identified the Old Mutual Wealth Spectrum [X] Fund as being the best match to meet
your investment needs and risk tolerance.
The Spectrum Funds are managed by Old Mutual Wealth’s Investment Division comprising Old Mutual
Global Investors (OMGI) and Quilter Cheviot, with advice on the appropriate mix of assets within each fund
(its ‘asset allocation’) from Towers Watson*.
Each Spectrum Fund’s asset allocation is determined by way of a mathematical formula known as Mean
Variance Optimisation (MVO). MVO aims to optimise the asset allocation of each fund so as to achieve the
highest expected level of return for a given level of risk. Risk is measured in terms of ‘volatility’. This is a
statistical measurement that shows how widely a range of returns produced by a fund varies from its
average over a particular period. Each Spectrum Fund aims to operate within a given range of volatility,
and these ranges also match the risk levels determined by the Old Mutual Wealth Risk Profiler.
With the support of Towers Watson*, the Multi-asset team within Old Mutual Investment Division reviews the
Spectrum Fund asset allocations on a quarterly basis to ensure that they continue to meet the level of risk
they are designed for, and that they reflect the current economic outlook. This keeps your investment
current and appropriate for your risk level.
The Spectrum Funds have been designed to ensure they always reflect current thinking. The asset
allocations and parameters used in the MVO process are reviewed by Old Mutual Global Investors and
Towers Watson* respectively. Each Spectrum Fund then rebalances to its most recent quarterly asset
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allocation target, thus maintaining the fund’s risk-return characteristics within a changing economic
environment.
The Spectrum Funds are available for:
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The Old Mutual Wealth platform, including ISA, Collective Investment Account, Collective
Investment Bond, and Collective Retirement Account
Old Mutual Wealth investment bonds
Old Mutual Wealth pensions
*Towers Watson & Co (‘Towers Watson’) conducts a quarterly review of the asset class assumptions used.
This review is carried out for Old Mutual Global Investors under agreed terms of engagement and not for
any third party. Towers Watson assumes no responsibility, duty of care or liability to any third party in respect
of the Old Mutual Spectrum Funds.
ABOUT OLD MUTUAL GLOBAL INVESTORS
Old Mutual Global Investors has grown strongly since its creation in August 2012 and now has assets under
management of £22.4 billion¹. The team consists of 230 industry professionals, including a team of 59
investment professionals. As part of Old Mutual Group it has a strong financial parent to support the
activation of its business strategy. Old Mutual Global Investors is the asset management division of Old
Mutual Wealth. To find out more information please go to: www.omglobalinvestors.com
ABOUT QUILTER CHEVIOT
Quilter Cheviot, part of Old Mutual Wealth, is one of the UK’s largest discretionary investment firms and can
trace its heritage to 1771.The firm is based in twelve locations across the UK, Jersey and Ireland and has total
funds under management of £17.2bn (€24bn) as at 30 June 2015. Quilter Cheviot focuses primarily on
structuring and managing bespoke discretionary portfolios for private clients, charities, trusts, pension funds
and intermediaries.
ROBUST AND PROVEN INVESTMENT PROCESS
The multi-asset team within the Old Mutual Wealth Investment Division that manages the Spectrum range
believes that investment markets are inefficient and hence there is scope for active fund management to
add value. However, it is clear that no single investment management company can ever be the ‘best’ in
all areas at all times.
Instead of managing investments directly, the team uses its extensive research resources to scour the world
for what they consider to be some of the best external fund managers in a particular asset class and
outsources the management of funds to them.
The multi-asset team aims to add value primarily through superior manager selection. If active managers
are to outperform consistently a number of criteria need to be in place:
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A clearly-defined philosophy
A disciplined investment process
Skilful and insightful fund managers
An organisational framework that provides the necessary support and motivation
Manager research is undertaken primarily by a dedicated investment research team, which combines the
expertise of analysts from a diverse range of backgrounds to provide in-depth coverage of all the main
asset classes.
Old Mutual Wealth’s Investment Division size and the combined reputation of OMGI and Quilter Cheviot
give it extensive access to the industry’s leading investment professionals. Their multi-asset research analysts
and portfolio managers collectively dedicate more than 6,000 hours a year to researching, meeting and
analysing managers across the globe, and maintain close, regular contact with over 200 fund
management groups worldwide.
They seek to identify managers who they feel will deliver superior performance. To do this they concentrate
on the four fundamental cornerstones of their research process – the 4Ps:
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Philosophy
Process
People
Performance
MANAGER SELECTION
Only managers who meet or exceed the multi-asset teams’ high expectations on all aspects of the 4P
research process may be assigned a 4P approved rating and be considered for potential inclusion in their
portfolios.
They look to combine skilful managers with complementary approaches, with a view to adjusting the
allocations to different investment styles and approaches as market conditions change. This is primarily the
responsibility of multi-asset team, which incorporates the findings of both the investment research and asset
allocation teams to create the optimal portfolios.
Having identified an appropriate mix of managers, quantitative analysis is undertaken to test their
understanding, and ensure that the portfolio has the characteristics sought.
All positions are monitored on a continuous basis by the portfolio managers, who play close attention to the
interaction between managers within our funds to ensure the optimal blend is maintained.
RECOMMENDED GENERAL WORDING
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Past performance is not necessarily a guide to the future.
The value of investments and the income from them can go down as well as up. You may not
get back as much as you invested.
The objectives of the Old Mutual Spectrum Funds vary from defensive to aggressive. The mix of
asset classes in each fund reflects the Authorised Corporate Director’s (ACD’s) opinion of which
combination of asset classes best matches the objective, but the asset classes may not always
perform in line with the objective of the relevant fund.
Investments in emerging markets tend to be volatile and are usually considered to carry a
greater degree of risk than investments in established markets.
The Spectrum Funds may hold assets which are priced in other currencies. The performance of
the fund may therefore rise and fall as a result of exchange rate fluctuations.
The Spectrum Funds may invest in money-market assets, including deposits with banks and other
financial institutions. The yield on the fund will fluctuate as interest rates change. There is a
possibility of default, reducing capital values.
The funds may hold shares or units in collective investment schemes which invest in commercial
property, in other words land and buildings. The value of property is generally a matter of a
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valuer’s opinion rather than fact. In addition, property investments may not be readily saleable,
which could lead to constraints on your ability to sell or switch.
Investors should be aware that whilst the Spectrum Funds may invest in derivatives (which are
types of investments whose price is derived from the value of a related asset) for the purpose of
efficient portfolio management only, collective investment schemes in which the funds hold
shares or units may, in accordance with their investment objective, use derivatives as a part of
their main investment strategy. In this case, the investors in the funds may be indirectly exposed
to the risks inherent in the use of derivative instruments.
Investors should be aware that the use by a fund of derivatives for the purpose of efficient
portfolio management exposes the fund to the risk that the provider of the derivative becomes
insolvent while it owes money to the fund.
Although the Spectrum Funds do not charge fees related to the performance of the funds, they
may invest in collective investment schemes which themselves charge performance-related
fees, and this may reduce the performance of the relevant fund.
www.oldmutualwealth.co.uk
Calls may be monitored and recorded for training purposes and to avoid misunderstandings.
Old Mutual Wealth is the trading name of Old Mutual Wealth Limited which provides an Individual Savings Account (ISA) and
Collective Investment Account (CIA) and Old Mutual Wealth Life & Pensions Limited which provides a Collective Retirement Account
(CRA) and Collective Investment Bond (CIB).
Old Mutual Wealth Life Assurance Limited, Old Mutual Wealth Limited and Old Mutual Wealth Life & Pensions Limited are registered in
England & Wales under numbers 1363932, 1680071 and 4163431 respectively. Registered Office at Old Mutual House, Portland Terrace,
Southampton SO14 7EJ, United Kingdom.
Old Mutual Wealth Life Assurance Limited and Old Mutual Wealth Life & Pensions Limited are authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services register
numbers are 110462 and 207977 respectively. Old Mutual Wealth Limited is authorised and regulated by the Financial Conduct
Authority with register number 165359. VAT number for all above companies is 386 1301 59
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Old Mutual Global Investors is a trading name for Old Mutual Global Investors (UK) Limited and Old Mutual Investment Management
Limited both of which are authorised and regulated by the Financial Conduct Authority. Their Financial Services register numbers are
171847 and 208543 respectively. Old Mutual Global Investors is registered in England & Wales under number 02949554 and its registered
office is 2 Lambeth Hill London EC4P 4WR.Old Mutual Investment Management is registered in England & Wales under number 4227837
and its registered office at Millennium Bridge House, 2 Lambeth Hill, London, EC4V 4AJ..
VAT number for all above companies is 386 1301 59.
213-7032R/March 2013
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