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LV= expands smoothed managed funds range

  • Multi-asset funds smooth prices over six months to provide less volatile returns

Savings and retirement specialist LV= is adding two funds to its Smoothed Managed Funds (SMF) range. 

The new funds - Extra Cautious and Impact Growth - are risk-rated 2 and 6 respectively and broaden the LV= Smoothed Managed Fund range to appeal to a wider range of investors.

The LV= Smoothed Managed Funds range previously had three options available: Cautious, Balanced and Growth. All funds in the range are available via Pension, Bond & ISA tax wrappers.

The new Extra Cautious Smoothed Managed Fund option is targeted at low-risk investors who would normally prefer to hold their savings in cash but who are concerned that rising inflation and low returns on deposit accounts are eroding the value of their savings. The key objective is long term steady investment growth with a very low level of investment risk. The asset mix of the fund will be about 65% bonds, 20% equities, 10% property, and 5% cash.

The new Impact Growth fund option, has a key objective of delivering long-term steady and sustainable growth with a medium level of investment risk. Within the objective LV= aims to invest in more sustainable assets in this fund. The proportion invested in equities and property is usually about 70%. 

The LV=’s Smoothed Managed Funds  are proving popular with financial advisers and investors with a doubling of inflows to £437m during 2021. They incorporate a smoothing mechanism that works by averaging daily unit prices over the previous 26 weeks to reduce short-term market volatility, and are designed for more investors with a low to low-medium risk profile. 

The funds are actively managed by the global asset manager Columbia Threadneedle Investments to a mandate set by LV= and can be accessed via LV= Smoothed Pension, LV= Trustee Investment Plan, bonds and LV= ISA. Investment charges start from 0.90% depending on the wrapper, with fund size discounts applying.

“LV=’s Smoothed Managed Funds are becoming increasingly popular among financial advisers and investors. The long-term performance track record of the funds’ unique smoothing mechanism and asset strategy makes them appealing to investors who are uncomfortable with the short-term ups and downs of stock market investments whilst at the same time having delivered an attractive levels of investment performance.

“LV=’s research highlights just how cautious many savers and investors are when it comes to their finances. Nearly half of say they are more concerned about possible losses than gains when faced with a financial decision, but they are also dismayed by the returns offered by deposit accounts.

“This presents consumers with a dilemma: if they are too cautious they risk missing out on future returns and could see their savings eroded by inflation; if they take too much risk they could end up choosing unsuitable investments that lead to an unsuitably stressful investment experience and potentially significant losses.

“So we are delighted to be able to expand the fund range to make this low volatility and appealing investment growth performance even more widely available to advisers and their clients. 

“The Impact Growth fund is designed to appeal to investors at retirement who want the prospect of higher returns but are looking for a more sustainable investment approach.

“The LV=’s Extra Cautious fund will appeal to savers who want a cautious fund with low volatility that offers the prospect of better returns than a deposit account.” 

David StevensRetirement Director at LV=

About LV= Smoothed Managed Funds

LV=’s Smoothed Managed Fund range is designed to provide steady long-term growth over a period of at least five years. LV=’s smoothing process doesn’t mean investments will not drop in value.

Smoothing will not prevent losses in longer term falling markets and investments may go down as well as up. The smoothing process has continued to perform as intended through the extreme volatility seen as a result of Covid-19. However, in exceptional conditions (for example, if the underlying price is 80% of the averaged or ‘smoothed’ price) the fund may be valued on the underlying price. We also reserve the right to do this at other times.