Old Mutual Wealth Life Assurance – client letter
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Dear «Salute»
E
Changes to the OMW Old Mutual Generation Target <3:4/4:4> fund
PL
I am writing to let you know about some forthcoming changes affecting the OMW Old Mutual
Generation Target <3:4/4:4> fund, in which you are invested. This fund invests in a
corresponding fund offered by Old Mutual Investment Management Limited.
EX
AM
The changes being made by Old Mutual Investment Management Limited are set out in the
accompanying summary document. They involve the fund’s name, objective, and fee structure.
They will come into effect from 1 October 2015. The changes are being made so that the fund
can be managed in a more flexible way to make the most of new pension freedoms introduced
by the Government in April this year
How will the changes affect your investment?
Old Mutual Investment Management Limited believes the changes will be in the best interests of
investors and that you will not be detrimentally impacted. The changes are not expected to alter
the risk profile of the fund and there will be no change to the nature or purpose of the fund.
What should you do next?
If you are happy with the changes there is no need for you to take any action. We have made
your financial adviser aware, so if you have any questions you should speak to them in the first
instance. They will also be able to help you if, for any reason, you would prefer to switch your
investment into an alternative fund(s).
If you wish to speak to someone in our Customer Contact Centre, you can contact us on
freephone 0808 171 2600 or email at ask@omwealth.com. Please remember though that we
are not authorised to give you any investment advice.
Overleaf are answers to some of the questions you may have, along with a summary of the
changes.
Yours sincerely
Anthony Scammell
Head of Customer Experience – Old Mutual Wealth
Changes to the OMW Old Mutual Generation Target <3:4/4:4> fund – Questions and
Answers
1. What are the specific changes that the fund manager is making?
There are three areas where changes are being made.
•
Change to the investment objective
The fund is designed to achieve both capital growth (returns) and income generation. The
manager intends to remove the explicit income target of 4% (as described in the current fund
objective). The removal of the income target allows the manager to invest in a wider range of
investments than the current funds managed by third party fund managers, to include direct
investment in income generating stocks and shares.
Also, the funds current objectives state that its target returns are over a fixed time period <(3%
over rolling 5 year periods) / (4% over rolling 7 year periods)>. These specific time periods are
being replaced in the objective with ‘over the medium term’ (which our regulator, the FCA,
determines as 5 years), in order to provide greater flexibility to adapt to different market
conditions and changing investor needs.
Change to the fund name
E
•
•
Change to the fee structure
PL
In order to reflect the removal of the explicit income target described above, the name of the
fund will change slightly (see table on next page).
EX
AM
The move to invest in direct holdings will mean increased work for the fund manager and his
team, but alongside this the outsourced costs involved in managing the fund will reduce. This
will result in an increase in the fund’s Annual Management Change (AMC) but a reduction in the
fund’s Total Expense Ratio (TER).
In line with this change the TER for the OMW Old Mutual Generation Target <3:4/4:4> fund will
also decrease (see table on next page).
The TER represents the annual cost an investor in a fund can expect to incur. It is the sum of
the fund manager’s Annual Management Charge (AMC) and other additional expenses incurred
directly by the fund. Please note that the TER does not include any Old Mutual Wealth product
charges.
2. Why are these changes being made?
Following the Governments introduction of new pension rules in April 2015, pension investors
need more flexibility in how they can manage their retirement funds over the long term.
These changes allow the fund manager to manage the assets within the fund in a more flexible
way to meet the needs of customers, who in future will rely on both the need for income and
capital growth in their retirement.
<Summary of changes – OMW Old Mutual Generation Target 3:4>
Name Change
Current Name
OMW Old Mutual Generation Target 3:4
New Name
OMW Old Mutual Generation Target 3
Objective Change
New Objective
The OMW Old Mutual Generation Target 3
fund invests solely in the Old Mutual
Generation Target 3 fund, a sub fund of Old
Mutual Spectrum Funds ICVC, a UK
authorised OEIC managed by Old Mutual
Investment Management Limited.
The underlying fund seeks to achieve an
annual return of 3% above the UK rate of
inflation over rolling 5 year periods through a
combination of the returns on income and
capital by gaining exposure to a diversified
range of asset classes. Out of this return, the
underlying fund aims to provide a regular
income of 4% per annum.
The underlying fund seeks to achieve an
annual return of 3% above the UK rate of
inflation over the medium term through a
combination of the returns on income and
capital by gaining exposure to a diversified
range of asset classes.
PL
E
Current Objective
The OMW Old Mutual Generation Target 3:4
fund invests solely in the Old Mutual
Generation Target 3:4 fund, a sub fund of Old
Mutual Spectrum Funds ICVC, a UK
authorised OEIC managed by Old Mutual
Investment Management Limited.
EX
AM
Notwithstanding the fact that the underlying
fund aims to achieve an “annual” return over
rolling 5 year periods, any capital is in fact at
risk and there is no guarantee that such return
will be guaranteed over that specific time
period or within another time period.
Notwithstanding the fact that the underlying
fund aims to achieve an “annual” return over
rolling 5 year periods, any capital is in fact at
risk and there is no guarantee that such return
will be guaranteed over that specific time
period or within another time period.
Investments in emerging markets tend to be
volatile and are usually considered to carry a
greater degree of risk than investments in
established markets. This relates to dealing,
settlement and custody practices, the
possibility of political or economic instability,
and developing legal, fiscal and regulatory
structures.
The underlying fund invests into a relatively
small number of assets, or into individual
countries or a specific market sector. Such
concentrated portfolios give rise to more risk
than where investments are spread across a
larger number of assets, countries or market
sectors.
The underlying fund may be denominated in or
hold assets in a currency other than Sterling.
The performance of the fund may therefore
rise and fall as a result of exchange rate
fluctuations.
The underlying fund invests in non-investment
grade high-yielding bonds. The high yield
reflects a higher risk of capital loss through
Investments in emerging markets tend to be
volatile and are usually considered to carry a
greater degree of risk than investments in
established markets. This relates to dealing,
settlement and custody practices, the
possibility of political or economic instability,
and developing legal, fiscal and regulatory
structures.
The underlying fund may be denominated in or
hold assets in a currency other than Sterling.
The performance of the fund may therefore
rise and fall as a result of exchange rate
fluctuations.
The underlying fund invests in non-investment
grade high-yielding bonds. The high yield
reflects a higher risk of capital loss through
default.
The underlying fund invests in bonds or
money market instruments (including deposits
with banks or other financial institutions). The
yield and/or value of the fund will fluctuate as
interest rates change. There is a possibility of
default, reducing capital values.
The underlying fund, or some of its underlying
The underlying fund invests in bonds or
money market instruments (including deposits
with banks or other financial institutions). The
yield and/or value of the fund will fluctuate as
interest rates change. There is a possibility of
default, reducing capital values.
The underlying fund, or some of its underlying
assets, may hold derivatives, or borrow to
invest ('gearing'), and the nature of these
investments can lead to a higher volatility in
the price of the fund. In addition, the fund may
have some exposure to credit risk if a provider
of derivatives fails to honour their obligation.
The value of property is generally a matter of a
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 from the fund.
assets, may hold derivatives, or borrow to
invest ('gearing'), and the nature of these
investments can lead to a higher volatility in
the price of the fund. In addition, the fund may
have some exposure to credit risk if a provider
of derivatives fails to honour their obligation.
The value of property is generally a matter of a
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 from the fund.
It should be noted that the performance of the
OMW fund will not match that of the
underlying investment due to OMW fund
charges, appropriate taxation adjustment and
the OMW investment process.
E
default.
EX
AM
TER Change
PL
It should be noted that the performance of the
OMW fund will not match that of the
underlying investment due to OMW fund
charges, appropriate taxation adjustment and
the OMW investment process.
Current TER
1.51%
New TER
1.48%
<Schedule of changes – OMW Old Mutual Generation Target 4:4>
Name Change
Current Name
OMW Old Mutual Generation Target 4:4
New Name
OMW Old Mutual Generation Target 4
Objective Change
New Objective
The OMW Old Mutual Generation Target 4
fund invests solely in the Old Mutual
Generation Target 4 fund, a sub fund of Old
Mutual Spectrum Funds ICVC a UK
authorised OEIC managed by Old Mutual
Investment Management Limited.
The underlying fund seeks to achieve an
annual return of 4% above the UK rate of
inflation over rolling 7 year periods through a
combination of the returns on income and
capital by gaining exposure to a diversified
range of asset classes. Out of this return, the
underlying fund aims to provide a regular
income of 4% per annum.
The underlying fund seeks to achieve an
annual return of 4% above the UK rate of
inflation over the medium term through a
combination of the returns on income and
capital by gaining exposure to a diversified
range of asset classes.
PL
E
Current Objective
The OMW Old Mutual Generation Target 4:4
fund invests solely in the Old Mutual
Generation Target 4:4 fund, a sub fund of Old
Mutual Spectrum Funds ICVC a UK
authorised OEIC managed by Old Mutual
Investment Management Limited.
EX
AM
Notwithstanding the fact that the underlying
fund aims to achieve an “annual” return over
rolling 7 year periods, any capital is in fact at
risk and there is no guarantee that such return
will be guaranteed over that specific time
period or within another time period.
Notwithstanding the fact that the underlying
fund aims to achieve an “annual” return over
rolling 5 year periods, any capital is in fact at
risk and there is no guarantee that such return
will be guaranteed over that specific time
period or within another time period.
Investments in emerging markets tend to be
volatile and are usually considered to carry a
greater degree of risk than investments in
established markets. This relates to dealing,
settlement and custody practices, the
possibility of political or economic instability,
and developing legal, fiscal and regulatory
structures.
The underlying fund invests into a relatively
small number of assets, or into individual
countries or a specific market sector. Such
concentrated portfolios give rise to more risk
than where investments are spread across a
larger number of assets, countries or market
sectors.
The underlying fund may be denominated in or
hold assets in a currency other than Sterling.
The performance of the fund may therefore
rise and fall as a result of exchange rate
fluctuations.
The underlying fund invests in non-investment
grade high-yielding bonds. The high yield
reflects a higher risk of capital loss through
Investments in emerging markets tend to be
volatile and are usually considered to carry a
greater degree of risk than investments in
established markets. This relates to dealing,
settlement and custody practices, the
possibility of political or economic instability,
and developing legal, fiscal and regulatory
structures.
The underlying fund may be denominated in or
hold assets in a currency other than Sterling.
The performance of the fund may therefore
rise and fall as a result of exchange rate
fluctuations.
The underlying fund invests in non-investment
grade high-yielding bonds. The high yield
reflects a higher risk of capital loss through
default.
The underlying fund invests in bonds or
money market instruments (including deposits
with banks or other financial institutions). The
yield and/or value of the fund will fluctuate as
interest rates change. There is a possibility of
default, reducing capital values.
The underlying fund, or some of its underlying
The underlying fund invests in bonds or
money market instruments (including deposits
with banks or other financial institutions). The
yield and/or value of the fund will fluctuate as
interest rates change. There is a possibility of
default, reducing capital values.
The underlying fund, or some of its underlying
assets, may hold derivatives, or borrow to
invest ('gearing'), and the nature of these
investments can lead to a higher volatility in
the price of the fund. In addition, the fund may
have some exposure to credit risk if a provider
of derivatives fails to honour their obligation.
The value of property is generally a matter of a
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 from the fund.
assets, may hold derivatives, or borrow to
invest ('gearing'), and the nature of these
investments can lead to a higher volatility in
the price of the fund. In addition, the fund may
have some exposure to credit risk if a provider
of derivatives fails to honour their obligation.
The value of property is generally a matter of a
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 from the fund.
It should be noted that the performance of the
OMW fund will not match that of the
underlying investment due to OMW fund
charges, appropriate taxation adjustment and
the OMW investment process.
E
default.
EX
AM
TER Change
PL
It should be noted that the performance of the
OMW fund will not match that of the
underlying investment due to OMW fund
charges, appropriate taxation adjustment and
the OMW investment process.
Current TER
1.52%
New TER
1.49%