Skandia UK

Skandia UK

December 15, 2010 10:45 ET

Skandia Finds Balanced Managed Pensions Funds Are Far Riskier Than Consumers Believe

SOUTHAMPTON, UNITED KINGDOM--(Marketwire - Dec. 15, 2010) - Balanced managed pension funds are often much riskier than many consumers believe them to be, according to the latest research from Skandia. The leading long term investment and pensions specialist found that many balanced managed pension funds are high to very high risk, whereas most consumers believe them to be a moderate risk investment.

Skandia ranks risk on a scale of 1 – 10, with 1 being the lowest risk investment and 10 being the highest risk.

4 out of 5 balanced managed pension funds are rated risk 8 or above

£149 billion is currently invested in balanced managed pension funds with risk scores of 8 or 9 out of 10, which equates to 81% of the total invested in these funds. Despite this, only 6% of people looking to make an investment would opt for a fund with these risk scores. The top five largest funds alone have £44bn invested in them, with 4 out of these 5 largest balanced managed pension funds having a risk rating of 9 out of 10, the other with a risk rating of 8.

Less than 5 per cent of consumers expect this

Less than 5 per cent of consumers expect a balanced managed pension fund to have a risk rating of 8 out of 10 or higher. The majority of consumers (64 per cent) believe that these balanced managed funds will have a risk score of 4, 5 or 6 out of 10. Consumers believe that "balanced" means reasonable or safe, which can lead an investor mistakenly investing in a fund with a higher risk than the consumer may be comfortable with.

Graham Bentley, Skandia's Head of Proposition, explains: "If a balanced managed fund has a risk rating of 8 or 9 out of 10 it is not necessarily a bad fund. What is vital is that people know what risk scores the funds have that they are invested in so they can tell whether these funds and the risk they carry are in line with their personal needs and expectations."

"The telling fact is that when considering making an investment, only 6% of people would opt for a fund with a risk score of 8 or 9. Yet if you do have an individual risk score of 8 out of 10 then a balanced managed fund with this risk score could well be the right investment for you. This individual risk score may indicate that your aim is to maximise returns over a longer period, whilst being aware of daily ups-and-downs in the market."

"When you consider that £149 billion is invested in balanced managed pension funds with these (high) risk scores there is a high possibility that many people do not know how risky their investments are and, as a consequence, have investments that are not aligned to their individual needs. The five largest funds alone have £44bn invested in them. Our advice would be to seek the assistance of trusted independent financial advisers who can select investments directly matched to your own risk profile."

To find out more about investing the Skandia way visit http://www2.skandia.co.uk/.

NOTES FOR EDITORS

Launched in 1979, Skandia UK has grown to become the largest retail fund platform provider by funds under management (£31.9 billion as at 30.09.2010). Skandia is a leader in the new model of long-term investments, offering flexible and tax efficient solutions that enable people to take control of their investments and plan for the best outcome.

Skandia is a division of Old Mutual plc, a leading international long-term savings group. Originating in South Africa in 1845, the group provides life assurance, asset management, banking and general insurance in over 40 countries in Europe, the Americas, Africa and Asia.

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