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Riding the waves: How Smoothed Managed Funds performed in turbulent times

23/10/2025

Financial markets are full of surprises – some exhilarating, some daunting. For investors, the real question isn’t whether volatility will strike, but how they can weather the storm when it does. That’s where Smoothed Managed Funds come in: multi-asset, risk-rated funds designed to help your clients grow their money while enjoying a smoother investment journey.

Data from the NextWealth Smoothed Funds Proposition and Distribution report shows they are gaining popularity with advisers:

  • 35% of UK financial advisers now recommend smoothed funds for new client money, just behind multi-asset funds and discretionary model portfolio services (MPS) [1].
  • Among financial advisers who currently recommend smoothed funds, 84% do so because they see them as suitable for cautious and low-risk clients, while 65% also highlight their value in protecting against sudden market losses [1].

Let’s look at how our smoothed funds have performed in some significant market moments.

The European Debt Crisis (2011)

Despite global market turmoil, smoothed funds delivered a steadier ride for investors, mitigating the impact of volatility.
Graph showing FTSE share steadily increasing over time

The Covid-19 Pandemic (2020)

While the ABI Mixed Investment 40-85% sector lost over -17.5% in early 2020, the largest daily drop in smoothed funds was just 0.10%.
Graph showing the stability of LV= FGB Managed Growth Funds versus ABI Mixed Investment Shares during the Covid 19 Pandemic

Credit Suisse Collapse (2023)

While strategic missteps and scandals led to a crisis that shook global markets, but our funds remained stable, ensuring member confidence and strong performance amid the volatility.
Graph showing the stability of LV= FGB Managed Growth Funds versus ABI Mixed Investment Shares during the Credit Suisse Collapse.

Trump Tariffs (2025)

Sweeping tariffs led to sharp market declines, but the smoothing mechanism protected members from the full force of the downturn.
Graph showing the stability of LV= FGB Managed Growth Funds versus ABI Mixed Investment Shares during the Trump Tariffs.

Why Smoothing Matters

All investments carry risk. But as these real-world events and adviser experiences show, a smoothing mechanism can offer a gentler journey—especially for clients with a lower risk appetite.

Important Information

Investments can go down as well as up. Past performance is not a reliable guide to the future. Smoothing doesn’t prevent losses in long-term falling markets.

Although it’s unlikely, we may, at our discretion, need to suspend the smoothing mechanism to protect our members and our business. This could be required if the underlying daily fund price was less than 80% of the value of the smoothed price, or in other exceptional circumstances. In the rare event we do need to take this step, the fund would typically be valued on the underlying price or, at our discretion, on a daily gradual averaged price (except ISA which would be valued on the underlying price) until smoothing is reintroduced.

The LV= fund performance figures in this document are gross and do not take account of the Annual Management Charge or any product charges, as these are taken by the cancellation of units.

The LV= fund shown in these examples is LV= FGB Managed Growth, the predecessor to the LV= Smoothed Managed Growth Bond fund. Both funds are managed in the same way with the same asset mix.

Ready to discuss smoothed funds with your clients?

Download a client facing version of this article so you can discuss practical examples of how Smoothed Managed Funds can help your clients invest with greater confidence, no matter what the markets bring.

To read more about our funds, visit our ‘Smoothing explained’ page.

References

[1] NextWealth_ Smoothed Funds Proposition and Distribution July 2025_REPORT