Sectors are collections of investment funds that share a common aim. The sectors are defined by The Association of British Insurers (ABI) as this allows the performance of similar funds to be compared.
No Sector, or asset class is consistently the ‘best’ or ‘worst’ as sectors perform differently in different market conditions. One Sector may be the best for a while but investment conditions change and the best sector one year can quickly be next year’s laggard.
Mixed Investment Sectors
Using funds drawn from Mixed Investment Sectors can help you to manage the volatility of your pension. The stock market moves differently from the bond market. In theory, by combining investments in both assets one is exposed to a lower overall risk than by holding either asset individually.
Mixed Investment Sectors take this principle a step further as they manage risk by providing access to funds holding a broad range of investments.
The charts show that funds holding fewer equities are less volatile and offer less potential for growth.
Funds in the Flexible Investment Sector are expected to have a range of investments; but may hold up to 100% in equities.