The economic assumptions that underpin the financial models are verified by Willis Towers Watson. Their role is advisory and involves the production of a quarterly parameter review report.
The report examines the underlying assumptions used for the investment solutions listed above and, if required, recommends changes to them. Adjustments to these underlying assumptions may then result in changes to the asset allocations.
Whilst the theory and volatility targets underpinning these investment solutions are the same, the asset allocations for each may not be identical. Any variation will result from slight differences in the assumptions and how they are applied, for example:
- Asset allocation changes are likely to be implemented less quickly for a client’s portfolio than by a fund or portfolio manager with rebalancing done at potentially different times and frequencies.
- The return and correlation assumptions for WealthSelect MPS are more refined due the limited number of funds available to the manager.
- The MPS Portfolios employ a dynamic approach to strategic asset allocation.
- There is a lower fee assumption for WealthSelect funds based on our negotiating power.
- Taxation of the funds is different to the tax assumptions accounted for within the investment tools at wrapper level.