Nest sees 10pc annualised 5-year return

MarkFawcettNest has achieved an annualised return in excess of 10 per cent for the growth phase of its default investment fund.

Publishing its first set of five-year performance figures, the state-backed provider says even its more cautious foundation phase retirement fund has achieved annualised returns of 8.6 per cent.

Nest chief investment officer Mark Fawcett says the performance shows its diversified approach, supported by strong returns from bonds and property investents, has paid dividends for its members.

Nest’s funds have no hedging against currency fluctuations and have benefited from a Brexit increase as a result of the impact of the reduction in the value of sterling on its globally diverse asset allocation.

Nest has also published explicit transaction costs for each of its range of target date funds. The highest costs, for its growth phase funds, are 8.3 basis points.

Fawcett says: “We have seen positive returns from across the portfolio, with property and bonds doing well. We haven’t changed our asset allocation approach as a result of Brexit because we were already globally diverse.

“Our combination of passive funds and our target date fund approach has allowed us to deliver low transaction costs.”

 

Performance figures, to the end of July 2016

Representative fund that has been going through the foundation phase (2057 retirement fund)

a.    1 year annualised total returns after deducting the annual management charge – 10.956

b.    3 year annualised total returns after deducting the annual management charge – 8.097

c.     5 year annualised total returns after deducting the annual management charge – 8.649

Representative fund in the growth phase (2040 retirement fund)

a.    1 year annualised total returns after deducting the annual management charge – 13.34

b.    3 year annualised total returns after deducting the annual management charge – 10.08

c.     5 year annualised total returns after deducting the annual management charge – 10.06