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The funds
We invest your contributions every month into one or more of the following funds:
The Equity Fund and the Bond Fund.
Both, Equity Fund and Bond Funds, are funds of funds which act as an umbrella for a number of underlying investment funds (pooled funds). The money invested in the funds is used to purchase shares in the underlying investment funds according to a defined asset allocation. The amount that can be invested in the funds every month depends on the size of the contributions and each fund’s current purchase price.
What you need to know: All you need to do is decide on the investment strategy. Everything else is done automatically. By choosing an investment strategy, you decide how you want your investment split between the Equity Fund and the Bond Fund. The growth strategy is heavily weighted towards the Equity Fund, whereas the security strategy focuses on the bond fund. The balance strategy falls somewhere in between.
Fund structure
The ’Equity Fund’ and ’Bond Fund’ are both funds of underlying pooled funds. Each fund has an investment advisor and its own investment strategy. As the funds are diversified across a number of managers, the impact of an individual manager’s performance, either positive or negative, is limited. If Vantage Towers is dissatisfied with a particular manager, there is the option to exchange the fund with an alternative.
Security with the life cycle model
There are two mechanisms that determine the allocation of Pension Plan contributions to the Equity Fund and the Bond Fund: Your investment strategy, where you choose between growth, balance or security, and the life cycle model underlying each of these investment strategies. This model defines exactly what weighting is given to each of the two funds at each age.
Risk/reward ratio
The equities underlying the funds are expected to produce a sound return over time. However, return inevitably entails risk. For this reason, there are two mechanisms that help mitigate your exposure towards this risk. Firstly, investing in a diversified fund of funds helps protect the performance against poor performance of an individual manager. Secondly, Vantage Towers guarantees all contributions to your Pension Plan.
Investing money in a life cycle model
Tailor-made for company pensions
A life cycle model is an investment strategy where your contributions are allocated to bond and equity funds according to your attained age. With this model, opportunities for higher returns are pursued in younger years before shifting focus to more conservative investments at higher ages. You do not have to make any decisions yourself. The model ensures that the allocation is adjusted automatically every year.
The basic principle behind this is that young employees first have to build capital for their pension and can absorb capital market risks more easily due to the long time period left until their investment matures. Older employees, on the other hand, need to protect their saved capital against a loss in value. The idea here is to steadily increase protection for the accumulated capital as you get closer to retirement.
Investment strategies
You decide how much focus to put on returns when you invest your pension money. You have a choice of three investment strategies. The more focus your strategy has on returns, the greater the share of equity funds. However, the life cycle model underlies all strategies, which means that the share of equities is always higher during your younger years.
It is not possible to predict how your pension will grow under each strategy. Nevertheless, you cannot make any wrong choice because we take care of the following:
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Carefully selected funds of funds
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Life cycle investment
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Contribution guarantee
Growth
This is the investment strategy that focuses most on return opportunities. The Equity Fund plays the most important role for this, representing 100% of your investment until age 45. The allocation to the Equity Fund will slowly decrease from then on. Despite this, it makes up a higher proportion of your investment that in the other investment strategies. The growth investment strategy offers the greatest opportunities, although a high level of volatility is possible.
Balance
The aim of this investment strategy is to find an even balance between capital market rewards and risks. With this strategy, the Bond Fund plays a larger role than with the growth strategy. Even so, the Equity Fund still makes up a significant allocation, especially for younger employees.
Security
This investment strategy is structured with the least focus on growth and, as such, relies most strongly on the Bond Fund. This strategy still allocates a portion of your investment into the Equity Fund so that you have a positive expected return.
Your investment’s security
No matter what happens, your pension is secure. Vantage Towers is required by law to guarantee you the total of all contributions that have ever been paid into your Pension Plan. So, regardless of the investment strategy you choose, you will not lose your contributions.
