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BirthStar launches Architas BirthStar Target Date Funds

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BirthStar has launched the Architas BirthStar Target Date Funds to retail investors. The launch is part of the BirthStar Project which combines investment and behavioural science to help make investing more straightforward without compromising on expertise.

The funds on offer cover target dates from 2015 to 2050 inclusive, and can be used to match any type of goal such as retirement, children’s educational costs or another life event.

By focusing on the time frame for investing, it makes it more straightforward for advisers to incorporate into a financial plan.  It also makes it more straightforward for customers without access to advice to select an investment that aims to provide a convenient way of investing for the future, using either an age-based or goal-based approach to investing.

Further, Target Date Funds aim to design out behavioural biases – such as naïve diversification, performance extrapolation, and status quo bias – that might otherwise negatively impact customer outcomes, which is why they are often used as the ‘do it for me’ investment option in company pension schemes.  This launch makes the potential benefits of this type of managed fund available to retail investors for their New Individual Savings Accounts (NISA), Self-Invested Personal Pensions (SIPP), Junior ISA and Junior SIPP accounts too.

The ‘target date’ as the name suggests is the date that withdrawals are expected to commence to support an investing goal.  Before the target date, the Fund aims to grow the value of an investment, so is weighted towards higher risk assets. After the Target Date, the Fund aims to protect the value of the investment, so is weighted towards lower risk assets, to support sustainable withdrawals.

The move from higher risk assets to lower risk assets is managed gradually over time (‘the glidepath’), and the fund remains cautiously managed for long after the target date. This means the fund can be used as a ‘fund for life’ with potential to help build up, shore up and drawdown an investment, making it a convenient ‘all-in-one’ fund for investors managing their own investments.

Architas, the AXA-owned multi-manager, is responsible for the oversight of each fund, while the portfolio of investments inside each fund is managed by AllianceBernstein, a global asset manager and specialist in Target Date Funds. The funds are managed out of London by David Hutchins and Karen Watkin, Portfolio Managers at AllianceBernstein, supported by a global multi-asset solutions team of 22 investment professionals with an average of 18 years’ experience.

As asset allocation is considered to be the main driver for a strategy’s returns, the asset allocation over time and the portfolio’s changing exposure is the key focus for the manager.

Unlike traditional lifestyling or stakeholder strategies, the Architas BirthStar® Target Date Funds are dynamically managed with the intention to adapt to changing market and economic conditions.  This provides a professionally designed and managed strategy delivered in a single fund for investors who share an investment goal as defined by their target date, creating attractive economies of scale.

Henry Cobbe, Managing Director, BirthStar says: “We want to make investing simpler and better value for investors without compromising on professionalism or expertise.  Advisers are increasingly outsourcing asset allocation to focus more on financial planning. Meanwhile, customers without access to advice are going online to search easy to understand and easy to use solutions.  By providing the whole investment journey within a single fund, we want to make properly designed and managed investing more straightforward and more affordable for all.”

Cedric Bucher, Head of Business Development, Architas, adds: “Architas are pleased to be able to facilitate this launch.  We aim to make investing straightforward, so Target Date Funds are a complementary fit to our existing multi-asset range. Consumer research confirmed a need for Target Date Funds, and we are glad to be working with BirthStar® and AllianceBernstein to meet this demand.

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