Fund Merger - Aberdeen UK Flexible Strategy Fund
Aberdeen Asset Management has advised that it is proposing to merge its UK Flexible Strategy Fund into its Multi Asset Fund on 11 September 2015.
Why does Aberdeen want to merge the fund?
The merger represents the next step in a process of product range rationalisation being implemented by Aberdeen following their purchase of Scottish Widows Investment Partnership Group Limited (SWIP) from Lloyds Banking Group plc.
Aberdeen has stated that it does not believe the merging fund remains a viable proposition for investors seeking to achieve a positive capital return, regardless of market conditions. The merging fund is small in size and continues to experience net outflows of assets. In addition, it says that the investment strategy of the merging fund is not consistent with Aberdeen’s core investment approach, philosophy and process. For these reasons, Aberdeen believe it is likely to become increasingly difficult to manage the merging fund efficiently.
How the merger affects policies
In respect of our guided architecture products - Oracle, Paragon and Quantum - the Aberdeen Multi Asset Fund (the receiving fund) is not part of the available fund range. Therefore, prior to the merger date we will switch all holdings into an alternative UK Equity fund that is part of the current fund range – the “Threadneedle UK Mid 250” (the alternative fund). We will also redirect regular premiums into this fund, where applicable.
Comparison of the merging and the alternative fund
Although both funds have a UK Equity investment focus, the alternative fund does have a different investment strategy than the merging fund. The alternative fund primarily invests in mid-sized stocks that are part of the FTSE 250 index whilst the merging fund is unrestricted. Although the two funds do have different strategies, we have selected the Threadneedle fund as it is one of the strongest performing funds within the UK Equity sector available to these products. It has significantly outperformed the merging fund whilst taking on a similar level of risk in order to achieve its objective.
Details of the differences, along with some performance comparison statistics, have been laid out in the policyholder and investment adviser letters which can be viewed opposite. These have been issued for any Oracle, Paragon and Quantum policies. Where there is an appointed investment adviser on the policy, the investment adviser will receive this correspondence instead. Servicing advisers will receive a copy of the letter for their records.
The merging fund has been removed from the Oracle, Paragon and Quantum product ranges with immediate effect, and we will longer accept any new, non contractual, investments into the fund.
Alternative fund choice
If policyholders, or appointed investment advisers, are not happy with their holding being transferred into the Threadneedle UK Mid 250 Fund they can choose to switch into any other fund available free of charge.
They can provide alternative instructions either by submitting a completed Fund switch instruction form, or if registered a registered user of our Online Service Centre and fund switching facility, conducting a switch and premium redirection online. All switches are free of charge.