Several questions focused on how the new Responsible Investment (RI) funds are likely to perform compared to non-RI funds. Some members are concerned that RI funds might not perform as well, while others think there’s a perception that RI means lower returns. There were also questions about the timing of the changes, fund performance and charges.
One of the most important aspects of the DC Plan is making sure that members have access to appropriate investment funds. As part of the investment strategy review, the Trustees spent a lot of time working with their advisers and considering whether including Responsible Investment (RI) funds within the Guided options could impact returns. The principle of RI is that by investing more in companies that have stronger policies on the environment, as well as social and governance issues, they are more likely to be sustainable businesses. The Trustees review showed that the inclusion of RI is an important, positive step that is in the long-term interest of members and can be taken while still offering opportunities for members to grow their savings.
As a final step before making the changes, the Trustee and its investment advisers will review the investment market conditions to ensure that it is an appropriate time to make the switch. In exceptional circumstances, for example, if global or economic events meant that investment markets were very volatile, the Trustees might decide to delay the changes.
We sent the survey to all our members and over 650 replied (22% of active members and a smaller percentage of deferred members). The responses to the survey were very positive towards RI. This was fairly consistent across different age groups. For example, 77% of members said they would feel more positive about their DC Plan savings if they were invested responsibly. You can read a summary of the key findings in Conversations with members.
The survey provided the Trustees with useful feedback and a sense of how respondents felt about RI investments. But the results were only one of several things the Trustees considered when deciding what changes to make.
While the RI funds are new to ITV, the underlying funds have been around for a while. The fund factsheets show the historical performance:
You can find the annual investment fund charges on the annual fund charges page.
When the Trustees selected the new investment funds an important consideration was making sure the funds offered value for members. If you're investing through the Guided approach, the new RI funds have the same investment management charges as the funds they replace, so you won't pay more.
All the Guided options will invest in one or more of the new RI funds at some stage of their investment cycle. The amount of your DC savings that will be invested in the new RI fund(s) will depend on which Guided option you choose and how far you are from your target retirement date. Please see the personalised leaflet we sent you at the end of June for more details.
If you don’t want to invest in the new RI funds, you can choose to invest your DC savings through the Customised approach. This lets you choose from a range of 16 funds (including the non-RI funds that make up the pre-investment change Guided designs). If you want to review your investment options, why not try our Investment Helper. By answering some questions, it’ll give you some investment options to consider as well as things to think about when deciding what approach is right for you.
Yes, any existing DC savings, as well as any new contributions, in these options will be invested in the new Guided options. How this affects your DC savings will depend on the Guided option you’re invested in and whereabouts you are in the Guided investment cycle.
If you don’t want to invest in the new RI funds, you can choose to invest your DC savings through the Customised approach. This lets you choose from a range of 16 funds (including the non-RI funds that make up the pre-investment change Guided designs). Just remember with this approach that you're responsible for deciding when to change how your DC savings are invested, particularly as you approach the date you want to access your savings.
If you want to review your investment options, why not try our Investment Helper. By answering some questions, it’ll give you some investment options to consider as well as things to think about when deciding what approach is right for you - whether you're looking to grow your savings or are more focused on protecting the value of your savings, for example, in the lead up to retirement.
There's no change to the way your savings are invested (unless you're investing in the Property and infrastructure fund as some of the investments in that fund will change – see the question below 'Why are the Trustees changing the Property and infrastructure fund?). From August, you'll have 3 more funds to choose from: the 3 new Responsible Investment (RI) funds we're adding to the mix. We're also changing some of the fund names and the terms we use to talk about investments – the big one to know is that Hands on will be called Customised.
Whenever you change your investments, there’s always a dealing cost built into the price of the funds bought and sold. This varies for each fund and between fund managers. Because the dealing price is built in, you won't see a separate charge or deduction. The value of your DC savings immediately before and after the investment changes are made will be the same.
The cost of switching depends on the overall trading that happens in the funds on the day the changes are implemented. This means it’s difficult to predict what these costs could be and there could potentially be no switching costs – and if there are we’d typically expect these to be a fraction of a percent of the amount switched. It’s worth noting that the investment manager will implement the changes in an efficient way to minimise these costs.
Part of this fund is being withdrawn – the bit that invests directly in commercial property like offices and shops; the part of the fund (about 50%) that invests in property and infrastructure shares will remain as part of a new fund called the Diversified investments (uncorrelated) fund.
The reason for removing the part of the fund that invests directly in property is because, over recent years, there have been several times when Property funds have suspended trading, for example, during the Covid pandemic when it was difficult to value properties.
When a fund is suspended it means that members are unable to buy or sell their investments in that fund. So, they can’t move their investments or access their savings. The Trustees think it’s important that members can change their investment or access their savings when they need to and therefore decided to change the Property and infrastructure fund to remove the risk of suspensions in the future.
The new Diversified investments (uncorrelated) fund offers the potential to grow your savings over the long term by investing in a broad mix of investments. The way it produces investment returns is different to more traditional share and bond funds, although there’s no guarantee that the fund will perform differently to shares.
When we sent out the annual benefit statements in June, we included a message to look out for information about investment changes. We posted a personalised leaflet to all member’s home addresses on 26th June explaining the investment changes, how the changes would affect them specifically and what members needed to do before the deadline on Friday 14th July if they wanted to make a different decision about how their DC savings were invested. We then sent a further communication inviting members to the vodcast.
Remember, this isn’t a once-only decision. If you need more time to consider your options and decide what’s right for you, you can change how your DC savings are invested once the blackout ends on Monday 7th August. You can give us new investment instructions by completing a Changing your investments form.
