HL GROWTH FUND

A default pension fund is where pension contributions are invested if you haven’t made your own investment choices. We’ve launched a new default pension fund, the HL Growth Fund, with the aim to provide long-term growth through a diverse range of investments.

Why we chose to design this fund

  • The HL Growth Fund will have between 70-85% invested in company shares, mostly by investing in collective investments which track global stock markets. This is a higher weighting to shares than your current default arrangement. While we believe this should offer a better potential for positive returns over the long term, it’s important to keep in mind that it can also add risk.
  • The new fund places a greater emphasis on Environmental, Social and Governance (ESG) considerations than your current default option, both in the selection and investment processes.
  • Designing the new default fund ourselves means that we have the ability to adapt it in the future to meet your needs, including the potential for greater ESG and ethical tilts and exclusions if required.

How it works

The HL Growth Fund aims to deliver long-term growth to investors. The fund invests across lots of different types of assets, such as company shares, fixed income investments (e.g. bonds), property, commodities and cash. This mix aims to bring diversification to the fund, which can help to reduce risk. The fund uses the ‘IA Mixed Investment 40-85% sector’ as its benchmark, which means its performance will be measured against other funds which invest between 40-85% into global stock markets. Company shares make up between 70-85% of the HL Growth fund, mostly by investing in collective investments which track global stock markets. The higher allocation to shares and investment in more volatile sectors such as emerging markets means that the fund has the potential to beat its benchmark, but also that it’s higher risk than a fund with a lower allocation to these areas. The value of your investment can go down as well as up, so you could get back less than you put in.

Investing responsibly

Sustainable and ethical behaviour is becoming increasingly important, and our investment choices can play a key part in that. We believe that sustainable businesses have greater potential to offer sustainable returns to investors over the long term. The HL Growth Fund is therefore invested with environmental, social and governance (ESG) factors integrated into the process. This means that the fund is expected to hold at least 70% of its value in investments included in indices for which there are ESG requirements. This will mean that the fund invests more in companies that score well on ESG criteria, and less in those that score poorly. The fund managers will then engage with poorer scoring companies to encourage them to improve their behaviour. The fund can also choose not to invest in certain investment areas, such as coal producers or weapons manufacturers. Read our online factsheet for full details of the HL Growth Fund. Below is a short video explaining how a default pension fund works. If you want to learn more about default pension funds, visit our Pension Explained guide.

Read the video transcript This video isn’t personal advice. All investments and income can fall as well as rise in value, so you could get back less than you invest. If you’re unsure of the suitability of an investment or course of action for your circumstances, please seek advice. Past performance shouldn’t be seen as a guide to what will happen in the future. More information on this topic and all areas of the new Default Investment Arrangement changes can be found in our FAQ document.