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For intermediary and employer use only

Workplace Target fund rangeperformance reportCovering quarter one 2020

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ContentsIntroduction 3

Market review – quarter one 2020 4

Workplace Target range – overview 6

Our retirement target approaches 7

Flexible Target range 9

Universal Balanced Collection 9

Aegon Adventurous Tracker 10

Aegon Growth Tracker 11

Aegon Balanced Tracker 12

Ethical Managed 13

Annuity Target range 14

Universal Balanced Collection 14

Aegon Adventurous Tracker 15


Aegon Balanced Tracker 17

Cash Target 18


Default funds 19

Aegon Workplace Default 19

Aegon Workplace Default Retirement fund 20

Aegon Default Equity & Bond Lifestyle fund 21

Interim Retirement Target range 22

Aegon Interim Retirement (Flexible Target) fund 22

Aegon Interim Retirement (Ethical Target) fund 23

Aegon Interim Retirement (Annuity Target) fund 24

Aegon Interim Retirement (Cash Target) fund 25

Our Fund Governance 26

The information contained in this report constitutes a factual review of performance only and is correct as at 31 March 2020. It shouldn’t be taken as a recommendation or advice. This communication is for intermediary and employer use only. It mustn’t be distributed to, or relied on by, customers.

There’s no guarantee that fund objectives will be met. The value of an investment may go down as well as up and investors may get back less than originally invested.

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IntroductionThis document details the key drivers of world markets in the most recent quarter and goes on to report on our Workplace Target fund range available via Aegon Retirement Choices (ARC).

Markets and funds change constantly, so the information it contains may have changed by the time you read this. The value of the funds in this report may go down as well as up for a number of reasons, for example market and currency movements. Investors may get back less than originally invested.

The information in this document is a factual review and shouldn't be taken as a recommendation or advice. It's correct to the best of our knowledge at the time of writing.

Please note: all performance data shown in this report is sourced from Financial Express.

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Market review – quarter one 2020The first quarter of 2020 saw a sharp downturn for all main global equity markets as the world felt the dramatic impact of the coronavirus (COVID-19) pandemic. First documented in late 2019, coronavirus spread globally at speed with confirmed cases approaching one million at the end of March and tens of thousands succumbing to the illness. Progressively, global governments sought to slow the transmission of the virus and save lives by implementing social distancing policies aimed at reducing contact between individuals. These policies differed from region to region but temporary restrictions on the social liberties of the global population triggered a substantial drop in global economic activity. The UK experienced the largest falls over the period as stocks endured their worst quarter since 1987. Emerging markets also saw substantial declines as investors turned away from Chinese stocks amid coronavirus fears and deteriorating relations between Russia and Saudi Arabia led to an oil price war. European equities experienced similar falls as the region became the epicentre of the pandemic, with spiralling death tolls in both Italy and Spain at the core. US equities tumbled faster than ever before, including in the Great Depression of 1929. The Chicago Board Options Exchange's CBOE Volatility Index (VIX), a measure of US equity volatility, reached the highest level since it launched in 1990. Asian and Japanese equities also fell as economic activity was curtailed by the ongoing pandemic.

In fixed income markets, global corporate bonds suffered losses amidst poor liquidity and concerns that plunging earnings may lead to a credit crisis. Alternatively, economic risks and falling interest rates contributed to increased investor demand for perceived ‘safe-haven’ investments, such as UK Government bonds and gold bullion, which both made gains. Sterling depreciated sharply in currency terms, enhancing the returns that UK investors received from overseas markets.

How did the major markets perform over 12 months? Over the past twelve months, all global equity markets have fallen in value as the scale of the downturn in the first quarter of 2020 eclipsed earlier performance. UK stocks saw the most significant declines as political instability and Brexit uncertainty also weighed on UK assets. Emerging markets, Asian and European equities also declined over a period of challenging economic growth globally. Japanese and US equities fell, but showed signs of some resilience due to positive economic policy earlier in 2019. In fixed income, UK Government bonds (gilts) gave the strongest performance, benefiting from plunging interest rates over the period.

Source: Financial Express, produced by Aegon. Charts compiled using total return indices to 31 March 2020. Figures in sterling so include the effect of currency fluctuations. Past performance is no guide to future performance.

FTSE Actuaries UK Conventional Gilts All Stocks

TR in GB

UK Gilts

FTSE All Share TR in GB

UK

LIBOR LIBID GBP 1 Week

TR in GB

Cash

IBOXX UK Sterling Non-Gilts

All Maturities TR in GB

UK Corporate Bonds

S&P 500 TR in GB

USA

TSE TOPIX TR in GB

Japan

FTSE World Europe ex UK

GTR in GB

Europe ex UK

FTSE Asia Pacific ex Japan

GTR in GB

Asia Pacific

FTSE Emerging GTR in GB

Emerging Markets

Ret

urn

(%)

-30

-25

-20

-15

-10

-5

0

5

10

-25.1

-14.2-12.0

-19.0

6.3

-3.4

-17.5 -15.8

0.1

FTSE Actuaries UK Conventional Gilts All Stocks

TR in GB

UK Gilts

FTSE All Share TR in GB

UK

LIBOR LIBID GBP 1 Week

TR in GB

Cash

IBOXX UK Sterling Non-Gilts

All Maturities TR in GB

UK Corporate Bonds

S&P 500 TR in GB

USA

TSE TOPIX TR in GB

Japan

FTSE World Europe ex UK

GTR in GB

Europe ex UK

FTSE Asia Pacific ex Japan

GTR in GB

Asia Pacific

FTSE Emerging GTR in GB

Emerging Markets

Ret

urn

(%)

-30

-25

-20

-15

-10

-5

0

5

10

-18.5

-2.8 -2.9

-13.4

9.9

1.5

-8.0-11.5

0.5

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What were the key events in the major markets in quarter one?

Here’s a round-up of some of the key events that shaped the investment returns we’ve seen across the major markets.

The UK left the European Union on 31 January 2020 and entered an 11-month transition period. As COVID-19 spread globally, the Bank of England (BoE) cut interest rates to 0.1%, bought gilts (government bonds) and corporate bonds and incentivised lending to small businesses. The new Chancellor of the Exchequer, Rishi Sunak, announced a raft of government spending measures totalling around 15% of Gross Domestic Product (GDP), designed to support the National Health Service (NHS) and to mitigate the impact of social distancing measures on individual and corporate finances.

In the US, the Senate acquitted President Donald Trump on two articles of impeachment that had been passed by the House of Representatives. The US central bank, the Federal Reserve (Fed), slashed interest rates by 1.5% to near-zero and announced their first ever corporate bond purchase programme. Figures released in March showed more than 3 million new unemployment claims in the previous week; beating the previous record of 695,000 jobless filings in 1982. The US Government responded by passing the Coronavirus Aid, Relief and Economic Security Act, pledging government spending of approximately 10% of GDP to support households and companies affected by the downturn.

In Europe, the spread of coronavirus became the focal point of the world with Spain and Italy particularly impacted from its rapid spread. These countries led the implementation of social distancing policies across much of the continent. In an effort to help countries alleviate the economic burden of extensive lockdown arrangements, the European Commission suspended its rules limiting government spending. This supported the announcement of substantial fiscal support for Italy and Spain, while Germany also abandoned its “black zero” policy of balancing the budget to support the economy.

In Japan, data released over the quarter showed that the economy contracted by 1.8% in the final quarter of 2019 amidst an increase in the consumption tax rate. In keeping with most other developed economies, Japan’s government announced substantial spending measures designed to help households and businesses withstand the economic impact of the COVID-19 outbreak. The spending package is equivalent to more than 10% of GDP. Global restrictions on sporting events to limit the spread of the virus led to the Tokyo Olympics being postponed from 2020 until 2021.

In Asia Pacific regions, China was the first country to enforce significant social distancing policies to combat COVID-19, particularly in the city of Wuhan and the province of Hubei, where the disease first surfaced. Implemented in January, these measures had a substantial economic impact, indicated by record low measures of activity reported in February’s business surveys. Despite recording early infections, South Korea and Singapore appeared to contain the spread of the disease through rigorous infection control measures. In Australia, the expected impact on economic growth led the Royal Bank of Australia to cut interest rates twice in March to 0.25% (previously 0.75%).

In Emerging Markets Iran launched retaliatory strikes against the US following the death of top Iranian general Qasem Soleimani in a drone strike early in the year. The “OPEC+” alliance of oil producers was unable to agree production cuts due to Russian opposition. This triggered a price war that contributed in a collapse in the price of West Texas Intermediate (WTI) crude oil from over $60 at the start of the quarter to $20.48 by the end of March. Moody’s became the final main ratings agency to remove an investment grade rating, a mark of higher quality, from South African debt while the country was in the midst of its own pandemic-related lockdown. This contributed to the Rand reaching its weakest ever level against the US dollar.

In fixed income markets, amidst plummeting interest rates, global government bond yields fell dramatically in March with UK 10-year gilt yield reaching a new record low of 0.16%. Corporate bonds struggled amidst the market turmoil. As corporate earnings expectations fell, credit spreads (the additional yield that investors demand from corporate borrowers over government borrowers) widened significantly. This led to substantial losses in higher-risk sectors such as high-yield bonds. In the March budget, the UK’s Chancellor launched a consultation to reform the retail price index of inflation (RPI). This is a risk to inflation-linked gilts, which are linked to the RPI and may be vulnerable if the government switches to a lower measure of inflation.

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Workplace Target range – overviewThree ways to prepare savings for retirement

All the Workplace Target funds use a two stage investment strategy that aims to grow savings in the early years (the growth stage), then prepare savings for retirement in the final six years (the retirement target stage). The range offers three retirement target approaches – Flexible Target, Annuity Target, and Cash Target – which reflect the mix of retirement income options open to savers in the wake of pension freedoms.

The Flexible Target approach moves assets into a cautious multi-asset mix as investors approach retirement, with approximately 26% equity, 49% fixed interest, and 25% cash on retirement. We’ve designed this approach for investors and schemes seeking to take advantage of the greater flexibility offered by the pension freedoms. It's designed to offer a balance between risk and returns to suit those approaching retirement.

The Annuity Target strategy is designed for schemes who believe most employees will buy an annuity on retirement. These funds move savers into 75% long gilts and 25% cash on retirement.

Finally, the Cash Target strategy is designed for savers who plan to cash-in their savings on retirement. This is aimed at schemes where most members have very small pots, or are likely to use other sources to create their retirement income (for example those who also have defined benefit pension income). It moves savers fully into cash on retirement.

What’s in the Workplace Target range?

The Workplace Target fund range broadens choice for employers and scheme members and each fund type offers one or more glidepath option, targeting flexibility, annuity, or cash on retirement.

Fund (Platform fund options) Flexible Target Annuity Target Cash Target

Balanced Tracker (0.05%) –

Growth Tracker (0.05%)

Adventurous Tracker (0.05%) –

Universal Balanced Collection (0.11%) –

Ethical Managed (0.37%) – –

The strategies are primarily designed for those workplace investors who do not make an active investment choice or receive advice. Schemes can also use our in-house default fund (see page 19).

We’ll continue to offer our existing range of lifestyle funds for workplace investors.

For more information, please see our website at https://www.aegon.co.uk/workplace/employers.html

https://www.aegon.co.uk/workplace/employers.html

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Our retirement target approachesOur Workplace Target funds are designed for use as scheme default funds. The information below details how each of our retirement target approaches changes as investors near retirement. We review our Workplace Target funds regularly and may change them if we believe it’s in the best interest of investors. There’s no guarantee the funds will achieve their objectives. Investors may get back less than they originally invested.

The Flexible Target stage

In the six years before the investor’s target retirement year (the Flexible Target stage), we’ll progressively move them into less risky investments. We’ll also move part of their investment into a cash fund in the final two years to cater for their maximum tax-free cash entitlement, currently 25% of their pension pot.

The Annuity Target stage

In the six years before an investor’s target retirement year (the Annuity Target stage), we’ll progressively move their investments into long gilts and cash with the aim of giving them more certainty about the size of annuity (pension) they’ll be able to buy when they retire and to cater for their maximum tax-free cash entitlement, currently 25% of their pension pot.

0%

20%

40%

60%

80%

100%

6 5 4 3 2 1 0

Growth fund Flexible Target Cash

% o

f fu

nd

Years to retirement

0%

20%

40%

60%

80%

100%

6 5 4 3 2 1 0

Growth fund Long gilts Cash

Years to retirement

% o

f fu

nd

Source: Aegon UK

Source: Aegon UK

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The Cash Target stage

In the six years before an investor’s target retirement year (the Cash Target stage), we’ll progressively move them into less risky investments and then into cash. On their selected retirement date, the fund will be 100% invested in cash.

0%

20%

40%

60%

80%

100%

6 5 4 3 2 1 0

Growth fund Flexible Target Cash

% o

f fu

nd

Years to retirementSource: Aegon UK

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Flexible Target range

Universal Balanced Collection (Flexible Target) fundThis fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in a well-diversified mix of international equities with the remainder in bonds and cash. It invests in a mix of different funds, from different fund managers, offering a mix of active and passive fund management, which means it doesn’t rely on the performance of one manager or management style alone. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.

Where the fund invests

In the growth stage, the fund invests in a mix of investments designed to grow an investor’s pension. The chart below shows where the fund invested on 31 March 2020.

How has the fund performed?

3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Universal Balanced Collection (Flexible Target) (ARC) -13.5 -4.7 0.9 n/a

Benchmark:

ABI Mixed Investment 40%-85% Shares pension sector median

-15.0 -7.7 -1.1 n/a

Source: Financial Express. Produced by Aegon. Figures in £s on a bid-to-bid basis, net of charges with gross income reinvested to 31 March 2020.

Past performance is no guide to future performance. The value of investments can go down as well as up for a number of reasons, for example market and currency movements. Investors may get back less than originally invested.

Source: Aegon UK. The figures above may not add up to exactly 100% due to rounding.

28.4%

North American equities

Asia Pacific ex Japan equities

UK equities

Global Fixed Interest

Japanese equities

UK Fixed Interest

Global Emerging equities

European equities

Others25.0%

15.9%

13.7%

9.5% 2.3% 0.6% 0.4% 0.3%

Cash

3.9%

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Aegon Adventurous Tracker (Flexible Target) fundThis fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of UK and international equities (company shares). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Adventurous Tracker (Flexible Target) (ARC) -20.0 -10.8 -0.6 n/a

Benchmark:

Composite of 50% FTSE All-Share TR/50% FTSE World ex UK TR

-20.5 -12.0 -0.7 n/a




49.5%

UK equities


European equities


Japanese equities

33.5%

8.2%

4.5%

4.3%

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Aegon Growth Tracker (Flexible Target) fundThis fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Growth Tracker (Flexible Target) (ARC) -14.7 -6.6 0.6 n/a

Benchmark:

Composite of 37.5% FTSE All Share TR/37.5% FTSE World ex UK TR/13.3% Markit iBoxx Non Gilts All Stocks GBP TR/9% FTSE Gilts All Stocks TR/2.8% FTSE Index-linked Over 5 Years TR

-15.5 -7.9 0.4 n/a




37.2%

17.6%

7.2%

3.4%

UK equities

Japanese equities

UK Fixed Interest



European equities


6.2%

25.2%

3.2%

Cash

0.1%

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Aegon Balanced Tracker (Flexible Target) fundThis fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of global equities (company shares) and UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Balanced Tracker (Flexible Target) (ARC) -9.4 -2.5 1.7 n/a

Benchmark:

Composite of 25% FTSE All Share TR/25% FTSE World ex UK TR/26.5% Markit iBoxx Non Gilts All Stocks GBP TR/18% FTSE Gilts All Stocks GBP TR/5.5% FTSE Index-linked Over 5 Years TR

-10.3 -3.7 1.4 n/a




35.2%

16.2%

14.3%

4.0% 2.2%

UK Fixed Interest

Japanese equities


UK equities


European equities


25.9%

2.1%

Cash

0.1%

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Ethical Managed (Flexible Target) fundThis fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in a diversified portfolio of UK equities (shares of companies), fixed interest securities (bonds), and cash, which meet the fund’s predefined ethical criteria. Its ethical criteria means the fund may have a bias towards small and medium sized companies. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Ethical Managed (Flexible Target) (ARC) -19.2 -6.0 -1.1 n/a

Benchmark:

Composite of 50% FTSE All Share TR/50% ABI Mixed Investment 20%-60% Shares sector average

-19.0 -12.8 -2.8 0.9




67.9%

15.8%

7.1%

4.6%

UK equities


UK Fixed Interest

European equities

4.5%

Cash

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Annuity Target range

Universal Balanced Collection (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in a well diversified mix of international equities with the remainder in bonds and cash. It invests in a mix of different funds, from different fund managers, offering a mix of active and passive fund management, which means it doesn’t rely on the performance of one manager or management style alone. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash) with the aim of giving you more certainty about the size of annuity (pension) you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Universal Balanced Collection (Annuity Target) (ARC) -13.5 -4.7 0.9 n/a

Benchmark:

ABI Mixed Investment 40%-85% Shares pension sector -14.3 -7.0 -0.7 2.3




28.4%



UK equities


Japanese equities

UK Fixed Interest

Global Emerging equities

European equities

Others25.0%

15.9%

13.7%

9.5% 2.3% 0.6% 0.4% 0.3%

Cash

3.9%

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Aegon Adventurous Tracker (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of UK and international equities (company shares). It’s designed to track the markets it invests in, so performance should be similar those markets. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash) with the aim of giving you more certainty about the size of annuity (pension) you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Adventurous Tracker (Annuity Target) (ARC) -20.0 -10.8 -0.6 n/a

Benchmark:

Composite of 50% FTSE All Share TR/50% FTSE World ex UK TR

-20.5 -12.0 -0.7 n/a




49.5%

UK equities


European equities


Japanese equities

33.5%

8.2%

4.5%

4.3%

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Aegon Growth Tracker (Annuity Target) fundThis fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage), it aims to grow long-term savings by investing mainly in global equities (company shares) with the remainder (around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash) with the aim of giving you more certainty about the size of annuity (pension) you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Growth Tracker (Annuity Target) (ARC) -14.7 -6.5 0.6 n/a

Benchmark:


-15.5 -7.9 0.4 n/a




37.2%

17.6%

7.2%

6.2% 3.4%

UK equities

Japanese equities

UK Fixed Interest



European equities


25.2%

3.2%

Cash

0.1%

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Aegon Balanced Tracker (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of global equities (company shares) and UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash ) with the aim of giving you more certainty about the size of annuity (pension) you can buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Balanced Tracker (Annuity Target) (ARC) -9.3 -2.4 1.7 n/a

Benchmark:

Composite of 25% FTSE All Share TR/25% FTSE World ex UK TR/26.5% Markit iBoxx Non Gilts All Stocks GBP TR/18% FTSE Gilts All Stocks GBP/5.5% FTSE Index-linked Over 5 Years

-10.3 -3.7 1.4 n/a




35.3%

16.2%

14.3%

4.0% 2.2%

UK Fixed Interest

Japanese equities


UK equities


European equities


25.8%

2.1%

Cash

0.1%

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Cash Target

Aegon Growth Tracker (Cash Target) fund This fund is aimed at those who plan to cash in their savings at retirement. It uses a two-stage investment process. In the early years (the growth stage), it aims to grow long-term savings by investing mainly in global equities (company shares) with the remainder (around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the cash target stage), we’ll progressively move you into less risky investments and then into cash. On your selected retirement date, your fund will be 100% invested in cash. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Growth Tracker (Cash Target) (ARC) -14.7 -6.6 0.6 n/a

Benchmark:


-15.5 -7.9 0.4 n/a




37.2%

17.6%

7.2%

6.2% 3.4%

UK equities

Japanese equities

UK Fixed Interest



European equities


25.2%

3.2%

Cash

0.1%

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In-house default fund

Aegon Workplace Default (ARC) This is Aegon's default fund. It is a single solution that adapts to meet employees' changing needs throughout their working life - right up to retirement and beyond. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (currently around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). In the six years before your target retirement year, we'll progressively move you into less risky investments. This process assumes that you'll remain invested at retirement, potentially withdraw some of your fund and keep your options about taking an income open. As this is Aegon's default fund, we reserve the right to make sure it continues to remain appropriate for use as a scheme default.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Workplace Default (ARC) -14.6 -6.5 n/a n/a




32.4%

20.5%

7.9%

3.5%

UK equities

Japanese equities

UK Fixed Interest



European equities


6.4%

26.0%

3.3%

Cash

0.1%

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Aegon Workplace Default Retirement fund (ARC) This fund is designed for those invested in the Aegon Workplace Default fund who have reached their target retirement year and intent to remain invested at retirement to keep their options about taking an income open. They’ll automatically be transferred into this fund in their selected retirement year. It aims to keep risk lower than the growth stage and make sure they’re not reliant on the success of just one investment type. It does this by investing in a mix of underlying investments (company shares, bonds and cash) and countries. It’s designed to track the markets it invests in, so performance should be similar to those markets. This fund is designed as a short-to-medium term investment.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Workplace Default Retirement (ARC) -5.3 -0.1 n/a n/a




28.0%

5.4%

18.7%

16.0%

1.6% UK Fixed Interest

OtherGlobal Fixed Interest

UK equities

Emerging Market equities

Pacific ex Japan equities

North American equities20.9%

CashJapanese equities

4.0%

0.9% 0.7%

European equities

3.7%

of 26

Aegon Default Equity & Bond Lifestyle (ARC) This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets. Then, six years before your nominated retirement year, it automatically starts moving into investments better suited to preserving the size of annuity you can buy (the lifestyle stage). It does this by investing increasing amounts into the Long Gilt fund. This process assumes you’ll buy an annuity when you retire. In the final two years, we’ll also move some of your investment into our Cash fund, to cater for your tax-free cash entitlement. Up until May 2018, this was Aegon’s default fund, which meant it was designed for use by company pension schemes. We reserve the right to make changes to make sure this fund continues to remain appropriate for use as a scheme default.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Default Equity & Bond Lifestyle (ARC) -14.7 -6.6 0.6 4.0




37.2%

6.2%

17.6%

7.2%

UK equities

UK Fixed Interest

European equities




Japanese equities

25.2%

Cash

0.1%

3.4%

3.2%

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Interim Retirement Target range

Aegon Interim Retirement (Flexible Target) fund This fund is designed for those invested in a Flexible Target fund who have reached their target retirement year, but haven’t yet taken their pension benefits. In their target retirement year, they will automatically be transferred into this fund. While investors decide how they want to take a retirement income, it aims to keep risk low and make sure they’re not reliant on the success of just one investment type. It does this by investing in a mix of investments (company shares, bonds and cash) and countries. It’s designed to track the markets it invests in, so performance should be similar to those markets. This fund is designed as a short-to-medium term investment.


The chart below shows where the fund invested on 31 March 2020.


3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Interim Retirement (Flexible Target) (ARC) -4.2 0.6 1.8 n/a




29.6%

7.1%

24.1%

4.3%

2.7% 0.9%

UK Fixed Interest

Japanese equities

UK equities


Others

European equities

North American equities20.2%

Cash

11.2%

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Aegon Interim Retirement (Ethical Target) fund This fund is designed for investors in the Ethical Managed (Flexible Target) fund who have reached their target retirement year, but haven’t yet taken their benefits as planned. In their target retirement year investors are automatically transferred into this interim fund. While investors decide how they want to take a retirement income, it aims to keep risk low and make sure they’re not reliant on the success of just one investment type. It does this by investing in a mix of investments (company shares, bonds and cash) that meet the fund’s pre-defined ethical criteria. Its ethical criteria means the fund may have a bias towards small-and medium-sized companies. This fund is designed as a short-to-medium term investment.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Interim Retirement (Ethical Target) (ARC) -10.2 -1.6 0.4 n/a




35.1%

10.9%

26.8%

2.4%

UK equities


UK Fixed Interest

European equities

24.0%

Others0.8%

Cash

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Aegon Interim Retirement (Annuity Target) fundThis fund is designed for those invested in an Annuity Target fund who have reached their target retirement year but have not yet bought an annuity (pension) as planned. In their target retirement year, they will automatically be transferred into this fund. It aims to help preserve the size of pension investors can buy through an annuity by investing 75% of the fund in long-dated UK government bonds (gilts). The remaining 25% of the fund is invested in cash, so investors can take the maximum tax-free cash lump sum they’re entitled to when they retire, based on current legislation. This fund is designed as a short-to-medium term investment.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Interim Retirement (Annuity Target) (ARC) 9.6 14.1 6.5 n/a



Source: Aegon UK. The figures above may not add up to exactly 100% due to rounding.75.1%

24.1%

UK Fixed Interest

Others

Cash

0.9%

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Aegon Interim Retirement (Cash Target) fundThis fund is designed for those invested in a Cash Target fund who have reached their target retirement year but have not yet cashed in their pension savings as planned. In their target retirement year, they will automatically be transferred into this fund. The fund aims to provide a return in line with money market interest rates, before charges, by investing in short-term, sterling denominated money market instruments such as bank deposits, certificates of deposit and short-term fixed interest securities. Like other funds in the ABI Deposit and Treasury sector, the fund can only invest in very short-term investments so the rates of return may be lower than for cash funds able to invest in riskier, longer-term cash securities. This fund is designed as a short-term investment.




3 months (%)

1 year(%)

3 years(% per year)

5 years(% per year)

Aegon Interim Retirement (Cash Target) (ARC) 0.2 0.8 0.6 n/a




3.5%

Others

96.5%

Cash

Our Fund Governance

As part of getting the UK ready for retirement we’re dedicated to making sure our insured funds are able to meet their commitments to you. Rigorous governance is our highest priority, and is underpinned by our Funds Promise:

Aegon is a brand name of Scottish Equitable plc (No. SC144517) and Aegon Investment Solutions Ltd (No. SC394519) registered in Scotland, registered office: Edinburgh Park, Edinburgh, EH12 9SE. Both are Aegon companies. Scottish Equitable plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Aegon Investment Solutions Ltd is authorised and regulated by the Financial Conduct Authority. Their Financial Services Register numbers are 165548 and 543123 respectively. © 2020 Aegon UK plc

INV 00376775 05/20

• We aim to offer high quality funds which meet their objectives.

• We monitor funds to check if they perform as expected.

• We take action if funds don’t meet expectations.

• We give you the facts you need to make decisions.

Find out more about our fund governance process on our website www.aegon.co.uk/fundgovernance

Which funds does our promise apply to?

Our funds promise applies to insured funds available to UK investors. These funds typically have a name starting with ‘Aegon’ or ‘Scottish Equitable’. This includes all the funds in the Workplace Target range.

The value of investments that don’t come with a guarantee can fall as well as rise and investors may get back less than originally invested.

Funds Promise Funds Promise

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