Diversified Growth Fund

Our Diversified Growth Fund (DGF) is designed to provide stable long-term growth for pension savings in the NOW: Pensions Trust (‘the Scheme’).

How we use the DGF

The DGF forms part of our ‘pension saving journey’ for Scheme members.

For most of our members’ working lives we invest their pension savings in the Diversified Growth Fund (DGF) to help them grow as much as possible.

Fifteen years before members’ planned retirement age, we gradually switch pension savings to the Retirement Countdown Fund (RCF), which is designed to protect them from falling in value before they’re due to be turned into retirement benefits.

Journey Path to retirement

At planned retirement age, 80% is in the RCF and 20% in the DGF. We call this the ‘Journey Path’.

Unless members tell us otherwise, we assume their planned retirement date is their State Pension age.

What the DGF invests in

The DGF is designed to provide stable growth, above the rate of inflation, without too much volatility (ups and downs in value) over the long term. To achieve this it spreads money across various groups of investments that tend to perform differently in a range of economic conditions, an approach known as diversification.

As part of our recent strategy review, we:

  • raised the DGF’s growth target by allocating more money to ‘‘return-seeking investments’, and
  • increased the number of investment groups the DGF uses for diversification from four to five.

The table below shows the five investment groups. The investments are managed across these groups to deliver the return, risk and responsible investing (RI) objectives.

Find out more about our approach to RI.

Equity Interest Inflation Income Other
Equities (shares) – including developed market equity, emerging market equity and private equity.

 

Assets which pay cashflows to investors and whose value is primarily affected by changes in interest rates including government bonds, sustainable bonds and interest rate swaps. Assets whose value is linked to inflation, including inflation bonds (government and non-government), inflation swaps and commodities (excluding fossil fuels). Assets that pay regular income including investment grade credit, high-yield credit, emerging market debt and illiquid investments, such as property or infrastructure. Assets that are different to the other investment groups, such as foreign currency and gold.
Purpose in portfolio – generate returns Purpose in portfolio – manage portfolio risk, generate returns Purpose in portfolio – manage portfolio risk, may generate returns Purpose in portfolio – generate returns Purpose in portfolio – manage portfolio risk, generate returns
Risk exposure: 0-70% Risk exposure: 0-70% Risk exposure: 0-50% Risk exposure: 0-30% Risk exposure: 0-30%

The DGF’s investment objectives

Find out more in our Statement of Investment Principles (SIP)
1

Returns

2

Risk

3

RI

Fund units are valued and priced on a weekly basis. A single price is used for members’ purchases and sales.

See our latest unit prices

We produce a factsheet for our Diversified Growth Fund each quarter. This includes an overview of market performance and risk exposure information.

See our March 2021 factsheet