The Mercer Master Trust - Default Fund Performance

Mercer Master Trust - Default Fund Performance

Our Master Trust’s default savings phase fund – the Mercer Growth Fund – has played an important role in growing members’ savings in real terms, with the aim that they can enjoy an adequate and sustainable income in retirement.

We are often asked about the performance of our Mercer Growth Fund, which launched in August 2011, against its objectives of achieving long term growth and delivering lower volatility than a pure equity market portfolio. To help demonstrate this we also put this performance in the context of a member’s overall outcome based savings goal – the aim being that member’s pension pots grow in excess of an inflation outcome based hurdle to build their pension pots in real terms.

12 Month Performance Periods to 30 June 2021

 

30/06/2016 to 30/06/2017
(%)

30/06/2017 to 30/06/2018
(%)

30/06/2018 to 30/06/2019
(%)

30/06/2019 to 30/06/2020
(%)

30/06/2020 to 30/06/2021
(%)

Mercer Growth Fund 17.5 6.9 6.7 -1.7 19.7
Target Benchmark 4.3 4.4 4.8 4.6 4.0
Outcome Based Hurdle
(Inflation + 3% p.a.)
5.6 5.4 5.0 3.6 5.5

Source: Mercer, Financial Express and Thomson Reuters Datastream.
Figures shown are net of all investment fees, but exclude administration costs which are specific to each participating employer.
Inception date taken as 22 August 2011.

Performance Periods to 30 June 2021

  1 Year (%) 
3 Years (% p.a.) 
5 Years  (% p.a.)
Since Inception
 (% p.a.)
Mercer Growth Fund    
19.7 7.9 9.5 10.0
Target Benchmark 4.0 4.5 4.4 4.4
Outcome Based Hurdle
(Inflation + 3% p.a.) 
5.5 4.7 5.0
4.8

Source: Mercer, Financial Express and Thomson Reuters Datastream.
Figures shown are net of all investment fees, but exclude administration costs which are specific to each participating employer.
Inception date taken as 22 August 2011.

When saving for an adequate and sustainable income in retirement, the risk of the investment strategy is equally as important as the return generated. The analysis shown below for the Mercer Growth Fund details the Fund’s performance over a range of metrics against a global equity index for comparison:

Risk Measures to 30 June 2021

  MERCER GROWTH EQUITY
Since Inception Volatility (%p.a.) 10.1 14.9
Max 1 Day Loss (%) -6.2 -8.6
Max Peak to Trough (%) -24.6 -26.1

Source: Mercer, Financial Express and Thomson Reuters Datastream.
Figures shown are net of all investment fees, but exclude administration costs which are specific to each participating employer.
Equity benchmark taken as MSCI World Index, sourced from Thomson Reuters Datastream.
Inception date taken as 22 August 2011.

The Mercer Master Trust Investment Approach

Our Master Trust aims to provide strong risk adjusted returns for default members in order to deliver an adequate and sustainable income in retirement. The investment design builds on our core investment beliefs which are summarised below:

1.     Risk Management

  • Asset allocation is one of the most important decision an investor can make and is the primary driver of investment risk and return in the Mercer Master Trust.
  • The Mercer Master Trust uses genuine diversification at the asset allocation, underlying ‘factor exposure’ and underlying investment manager levels.

2.     Active Management

  • The Mercer Master Trust utilises a mix of active and passive management in its design.
  • The open architecture and best of breed approach currently utilises 17 strategies from 12 different managers in the Mercer Growth Fund maximising the impact of our global manager research.
  • To keep costs at a minimum, more efficient asset classes are passively implemented, targeting limited use of active management in areas where the most value can be added.

3.     Dynamic Management

  • We also utilise a dynamic asset allocation overlay, allowing the Mercer Growth Fund to be actively managed to either take advantage of return generating opportunities or reduce risk when markets are overpriced.
  • Dynamic asset allocation has enhanced the fund’s returns every calendar year since our Growth Fund’s inception. Compounded over time this has the ability to make significant improvements to members’ ability to retire.

4.     Operational Efficiency

  • The Mercer Master Trust has completed the Master Trust Assurance Framework which includes internal controls on assessing the quality of the investment operations and investment implementation. The master trust assurance provides an important and independent sign of quality, building trust and confidence that our Master Trust complies with the highest levels of internal controls.

5.     Sustainability

  • Our Master Trust believes that taking a sustainable investment view is more likely to create and preserve long-term investment performance for members by addressing financial risks and costs associated with ESG factors as well as growth opportunities in industries most directly affected by sustainability challenges.
  • Sustainability is integral in how we research, rate and build portfolios. Mercer assign ESG ratings to all managers - including passive strategies - as part of the manager research process.

If you would like to know more about how the Mercer Master Trust can help you and your members save for an adequate and sustainable retirement or if you would like to know more about the Mercer Growth Fund, how it is structured and managed, then please contact us to find out more.

Important Notices

© 2021 Mercer Limited. All rights reserved

Mercer Limited is authorised and regulated by the Financial Conduct Authority. Registered in England No. 984275. Registered Office: 1 Tower Place West, Tower Place, London, EC3R 5BU.

This guide is for information only and is not personal financial advice. If you require financial advice you should seek this from an authorised financial adviser.

The value of investments can go down as well as up, so you could get back less than you invest.  Past Performance is not a reliable indicator of future results.