Explaining smoothing to your clients doesn’t need to be complicated. It’s easy for your clients to understand as it’s based on what’s already happened - rather than what might happen in the future.
So, how does smoothing work?
Our smoothing mechanism takes the average of a fund’s daily price over the past 26 weeks – this produces a ‘smoothed’ average fund price. The smoothing mechanism is applied separately to each individual contribution paid.
Your clients will experience less volatility as the effect of dramatic stock market fluctuation is ironed out by the smoothing mechanism. If there’s sudden and dramatic market growth, fund growth will be less – but if markets quickly fall, the smoothing mechanism cushions the dramatic impact made.
This gives real appeal to your clients who are cautious with their investment, or are retired.