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 a calmer investment journey as the effect of large daily stock market fluctuation is dampened by the smoothing mechanism. In the event of sudden stock market growth, smoothed funds will not reflect this immediately, but equally if markets quickly fall the smoothing mechanism helps to cushion the impact.
This could make our smoothed funds particularly appealing to clients who are cautious in their investment style, or are taking a retirement income.