Unimpressed by NEST
WealthAdviser has picked up our long-running critique of the investment approach that NEST plans to follow for the ‘target date funds’ that make up the default option (expected by NEST to account for 90% of savings).
‘Wealth management firm No Monkey Business (NMB) believes the National Employment Savings Trust (NEST) should follow its lead and adopt the principles of Liability Driven Investment (LDI). According to NMB, NEST’s newly-published Statement of Investment Principles (SIP) makes ill-advised trade-offs in its target date funds between short-term, nominal volatility and long-term real outcome risk. The impact is that younger members will be irrationally conservative, middle-aged members will exchange equity risk with inflation risk and older members approaching retirement will be matched to the wrong kind of pension.’
Read the whole article here.
WealthAdviser is published by GFM, ‘the largest online news publisher serving institutional investors/wealth managers and their investment managers/advisers across all asset classes’.